Question
Q1: You have the alternative of paying for university fees today for a payment of $15,000 or, you can select a payment plan where you
Q1: You have the alternative of paying for university fees today for a payment of $15,000 or, you can select a payment plan where you pay $7,000 in 8 months from today and another $12,000 in exactly 24 months from today. If the interest rate is 12.4%p.a. compounding monthly, what is the advantage that the payment plan has over the upfront payment?
(expressed in present day value rounded to the nearest cent; do not show $ sign or comma separators; if the payment plan is more costly than $15,000 today, your answer will show a negative eg. -300.35)
Q2: Find the future value in 7 years of the following cash flows: 1,000 in 2 years and 10,000 in 4 years. The interest rate is 7.3% p.a. compounded monthly for the first 5 years and 5.9% p.a. compounded half-yearly thereafter. (Correct your answer to the nearest cent without any unit (No need to put "$"). Do not use "," in your answer. e.g. 123456.78))
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started