Question
6a. What is the present value of $1,000,000, due 25 years from now? b. What is the present value of a $40,000 ordinary annuity for
6a. What is the present value of $1,000,000, due 25 years from now? b. What is the present value of a $40,000 ordinary annuity for 25 years? c. What is the present value of a $40,000 perpetuity, if the first payment is 1 year from now? d. What is the present value of a $40,000 perpetuity, if the first payment is now? 7. You borrow $35,000 today and will make equal annual payments for the next 3 years, starting in 1 year. a. What is the value of the annual payment if the nominal interest on the loan is: 9.50% Payment b. Show the amortization of the loan in the table set up below: Year Beg. Balance Payment Interest Principal Ending Balance 1 2 3 TOTAL
Nominal interest rate =10%
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