please do number 39

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204 LO1 34. Calculating Annuity Interest Rates Shakespeare from his classic literature, what is not well-known is that he was Although you may know William an astute investor. In 1604, when he was 40 and writing King Lear, Shakespeare grew worried about his eventual retirement. Afraid that he would become like King Lear in his retirement and beg hospitality from his children, he purchased grain "tithes," or shares in farm output, for 440 pounds. The tithes paid him 60 pounds per year for 31 years. Even though he died at the age of 52, his children received the remaining payments. What interest rate did the Bard of Avon receive on this investment? 35. Comparing Cash Flow Streams You've just joined the investment banking firm of Dewey, Cheatum, and Howe. They've offered you two different salary arrangements. You can have $6,100 per month for the next two years, or you can have $5,100 per month for the next two years, along with a $25,000 signing bonus today. If the interest rate is 7 percent compounded monthly, which do you prefer? 36. Calculating Present Value of Annuities Peter Lynchpin wants to sell you 01 an investment contract that pays equal $22,500 amounts at the end of each year for the next 20 years. If you require an effective annual return of 8 percent on this investment, how much will you pay for the contract today? 4 37. Calculating Rates of Return You're trying to choose between two different investments, both of which have up-front costs of $30,000. Investment G returns $65,000 in six years. Investment H returns $98,000 in nine years. Which of these investments has the higher return? 38. Present Value and Interest Rates What is the relationship between the value of an annuity and the level of interest rates? Suppose you just bought 10-year annuity of $5,200 per year at the current interest rate of 10 percent per year. What happens to the value of your investment if interest rates suddenly drop to 5 percent? What if interest rates suddenly rise to 15 percent? 39. Calculating the Number of Payments You're prepared to make monthly payments of $250, beginning at the end of this month, into an account tha pays 8 percent interest compounded monthly. How many payments will yo have made when your account balance reaches $50,000? 40. Calculating Arranty Present Values You want to borrow $75.000 from your local ban buy a new sailboat. You can afford to make monthly payments of but no more. Assuming monthly compounding, what the higher ord on a 60-month APR loan? h 18the Buffalo Bill