Question
h. You have just borrowed $190,000, and you agree to pay it back over the next 25 years in 25 equal end-of-year payments plus 11
h. You have just borrowed $190,000, and you agree to pay it back over the next 25 years in 25 equal end-of-year payments plus 11 percent compound interest on the unpaid balance. What will be the size of these payments?
i. What is the present value of a perpetuity of $1,900per year discounted back to the present at 8 percent?
j. What is the present value of an annuity of $1,700 per year for 10 years, with the first payment occurring at the end of year 10 (that is, ten $1,700 payments occurring at the end of year 10 through year 19), given a discount rate of 7 percent?
k. Given a discount rate of 13 percent, what is the present value of a perpetuity of $1,500 per year if the first payment does not begin until the end of year 10?
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