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Please answer above question (calculating the NPVs and showing work) and the below. Question 4 2 out of 2 points When you go to the
Please answer above question (calculating the NPVs and showing work) and the below.
Question 4 2 out of 2 points When you go to the bank you begin talking with one of the managers about her work. The bank has just released new financial products, described below, with the prices paid now. She asks you if any of these products are not financially advisable (i.e., they generate positive NPV) for the bank if their current annual opportunity cost of capital is 5%. Product 1: For a price of $36,000, the consumer receives annual payments of $1,000 starting immediately and lasting forever, and the payments increase by 2% per year. Product 2: For a price of $30,000, the consumer will receive a one-time payment of $350,000 in 50 years. Product 3: For a price of $30,000, the consumer will receive 20 annual payments of $2,500 starting in two years. The bank manager is curious about the break-even point for each product, in particular Product 1. Determine the opportunity cost of capital that allows the bank to just break even with the sale of Product 1 as described above. Enter your answer as a whole number percentage to two decimal places (e.g. 12.65% not .13). Question 4 2 out of 2 points When you go to the bank you begin talking with one of the managers about her work. The bank has just released new financial products, described below, with the prices paid now. She asks you if any of these products are not financially advisable (i.e., they generate positive NPV) for the bank if their current annual opportunity cost of capital is 5%. Product 1: For a price of $36,000, the consumer receives annual payments of $1,000 starting immediately and lasting forever, and the payments increase by 2% per year. Product 2: For a price of $30,000, the consumer will receive a one-time payment of $350,000 in 50 years. Product 3: For a price of $30,000, the consumer will receive 20 annual payments of $2,500 starting in two years. The bank manager is curious about the break-even point for each product, in particular Product 1. Determine the opportunity cost of capital that allows the bank to just break even with the sale of Product 1 as described above. Enter your answer as a whole number percentage to two decimal places (e.g. 12.65% not .13)Step by Step Solution
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