Question
1. You own a thriving restaurant but are getting tired of the long hours. Rafael Sandino offers to buy the business with the following monthly
1. You own a thriving restaurant but are getting tired of the long hours. Rafael Sandino offers to buy the business with the following monthly payments: $2,500 at the end of each month for 36 months, followed by $3,500 for 36 months. Assuming that you can earn 12% compounded monthly, what is the equivalent cash price of Rafael's offer?
2. You have a chance to buy a promissory note. Natalia Sandino borrowed some money from her mother, agreeing to repay her with 72 monthly payments of $350. Natalia has just made her 26th monthly payment. Natalia's mother offers to sell you the note, in which case you will receive the remaining payments from Natalia. If you want to earn 14.5% compounded monthly, what price should you pay?
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