Question
Please assist with the following: What is the value at the end of Year 3 of the following cash flow stream if interest is 4%
Please assist with the following:
What is the value at the end of Year 3 of the following cash flow stream if interest is 4% compounded semiannually? (Hint: You can use the EAR and treat the cash flows as an ordinary annuity or use the periodic rate and compound the cash flows individually.)
0 | 2 Periods | 4Periods | 6 Periods | |
0 | $100 | $100 | $100 |
What is the PV?
What would be wrong with your answer to Parts 1(1) and 1 (2) if you used the nominal rate, 4%, rather than the EAR or the periodic rate, Inom/2 = 4%/2 = 2%. to solve the problems?
Construct an amortization schedule for a $1,000, 4% annual intrest loan with three equal installments. What is the annual intrest expense for the borrower and the annual interest expense for the borrower and the borrower and the annual intrest income for the lender during year 2?
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