Question
1)You must make payment of $143,202 ten years from today. In order to prepare for this payment, you will make 5 equal deposits, beginning today
1)You must make payment of $143,202 ten years from today. In order to prepare for this payment, you will make 5 equal deposits, beginning today and for the next 4 quarterly. The accumulated amount at the end of the fifth quarter will be left in the account until the payment date at the end of ten years from now when the balance in the account should have grown to $143,202. How large must each of the 5 equal deposits be rounded to the nearest dollar?
2) If manager only invest in project that have a profitability index greater than 10, what will happen to:
a. the cash flow (increase or decrease)
b. Firm value (increase or decrease)
c. value of the firm's stock should remain constant
d. Manager will be forced to explain to stockholders why the net worth of the firm is declining
3) You have bought a house worht $260,000 by taking 15-year loan at an annual rate of 4% per annum compounded monthly, what will be the loan outstanding at the end of year?
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