Compound Interest/loan Questions:

1a, You borrow one million dollars. The loan is amortized over a 25-year period. You contract on a rate of 10% compounded semi-annually with bi-weekly (every two weeks) payments for a fixed rate 5-year term. You make an additional $50,000 payment at the end of the fourth year. What do you owe at the end of the 5-year term (within 2000)?

1b,

1c, Suppose you purchase an annual coupon bond with a $1,000 face value and 20-year maturity that was originally issued 3 years ago. The coupon rate was 10%. The current interest rate is 8%. Today is the day before the 3^rd coupon payment. What is the competitive price of the bond (within $15)?

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Suppose the interest rate between t=0 and t=1 is 2% and it increases by 2% each year thereafter. Find the value of X that makes the following two cash flows equivalent: CF#1: t=1: 100; t=2: 200; t=3: 300; CF#2: t=0: X; t=2: 2X; t=3: 3X Suppose the interest rate between t=0 and t=1 is 2% and it increases by 2% each year thereafter. Find the value of X that makes the following two cash flows equivalent: CF#1: t=1: 100; t=2: 200; t=3: 300; CF#2: t=0: X; t=2: 2X; t=3: 3X