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Question 1 You are negotiating to make a 10-year loan of $35,000 to ABC Company. According to the agreement ABC Company will pay the loan
Question 1 You are negotiating to make a 10-year loan of $35,000 to "ABC Company. According to the agreement "ABC" Company will pay the loan in the following manner: 1. $2,500 at the end of Year 1, 2. $5,000 at the end of Year 2, 3. $7,500 at the end of Year 3, 4. $10,000 at the end of Year 4, and 5. a fixed but currently unspecified cash flow at the end of each year from Year 4 through Year 10. "ABCCompany is essentially a low risk company, so you are confident the payments will be made. Accordingly, you regard an 8% as an appropriate rate of return on a low risk but illiquid 10-year loan Based on the above given information, answer ALL the questions that are presented on the following page EDSA312.00 MR-Cuptor 512 P Question 1 You are negotiating to make a 10-year loan of $35,000 to "ABC Company. According to the agreement "ABC" Company will pay the loan in the following manner: 1. $2,500 at the end of Year 1, 2. $5,000 at the end of Year 2, 3. $7,500 at the end of Year 3, 4. $10,000 at the end of Year 4, and 5. a fixed but currently unspecified cash flow at the end of each year from Year 4 through Year 10. "ABCCompany is essentially a low risk company, so you are confident the payments will be made. Accordingly, you regard an 8% as an appropriate rate of return on a low risk but illiquid 10-year loan Based on the above given information, answer ALL the questions that are presented on the following page EDSA312.00 MR-Cuptor 512 P
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