Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are given the opportunity to make an investment in a unique financial instrument. If you invest, you would receive cash flows over the next

image text in transcribedimage text in transcribed

You are given the opportunity to make an investment in a unique financial instrument. If you invest, you would receive cash flows over the next several years in the following manner (assume that the end of "Year 1 is one full year from today): Year 1: $11,000 Year 2: $13,000 Year 5: $11,000 You could personally invest this cash and receive a 8% annual return. What is the present value of this financial instrument? Please write your answer, without any dollar sign in fron, rounded to the nearest whole dollar! 28817 You are looking to take out a $56,000 loan to pay for school. The loan would be a five-year loan. The lender offers you a 9% interest rate on the loan and also offers to structure it in one of three ways: a) As a discount loan b) As an interest-only loan c) As an amortized loan. Rounded to the nearest whole dollar, what will be your balance at the end of year 1 if you take the loan as a: a) discount loan? 61040| b) interest-only loan? 56000 c) amortized loan? 68930 Which of these loans will collect the lowest amount of interest over the life of loan? A. interest-only loan B. discount loan C. amortized loan

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Health Care Finance

Authors: William O. Cleverley, Andrew E. Cameron

6th Edition

0763742368, 978-0763742362

More Books

Students also viewed these Finance questions