Search [ Immer Questions 1) Your partner has offered to give you either $75,000 today or $150,000 in 9 years for an investment. If the interest rate is 8% per year, which option is preferable? 2) You have a loan outstanding for the company. It requires making six annual payments at the end of the next six years of $9,000 each. The bank has offered to restructure the loan so that instead of making the three payments as originally agreed, you will make only one final payment at the end of the loan in six years. If the interest rate on the loan is 9.85%, what final payment will the bank require to make it indifferent between the two forms of payment? 3) You work for a pharmaceutical company that has developed a new drug. The patent on the drug will last 17 years. You expect that the drug's profits will be $1 million in its first year and that this amount will grow at a rate of 5% per year for the next 17 years. Once the patent expires, other pharmaceutical companies will be able to produce the same drug and competition will likely drive profits to zero. What is the present value of the new drug if the interest rate is 10% per year? 4) Your firm spends $5,000 every month on printing and mailing costs, sending statements to customers. If the interest rate is 0.5% per month, what is the present value of eliminating this cost by sending the statements electronically? 5) You have decided to buy a perpetuity. The bond makes one payment at the end of every year forever and has an interest rate of 8%. If you initially put $1,000 into the bond, what is the payment every year? 6) You have found three investment choices for a one-year deposit: 9% APR compounded monthly, 12% APR compounded annually, and 9% APR compounded daily. Compute the EAR for each investment choice. Assume that there are 365 days in the year. 7) If the rate of inflation is 5.6% what nominal interest rate is necessary for you to earn a 3.6% real interest rate on your investment? OLD-B /