Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have a loan outstanding. It requires making seven annual payments of $2,000 each at the end of the next seven years. Your bank has

image text in transcribed You have a loan outstanding. It requires making seven annual payments of $2,000 each at the end of the next seven years. Your bank has offered to allow you to skip making the next six payments in lieu of making one large payment at the end of the loan's term in seven years. If the interest rate on the loan is 6%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment? The final payment the bank will require you to make is $ (Round to the nearest cent.) 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 $2 million in its first year and that this amount will grow at a rate of 3% 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? The present value of the new drug is $ million. (Round to three decimal places.) You have an investment account that started with $1,50020 years ago and which now has grown to $9,000. a. What annual rate of return have you earned (you have made no additional contributions to the account)? b. If the investment account earns 17% per year from now on, what will the account's value be 20 years from now? a. What annual rate of return have you earned (you have made no additional contributions to the account)? Your annual rate of return is %. (Round to two decimal places.) You are thinking of purchasing a house. The house costs $448,000. You have $40,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 20-year mortgage that requires annual payments and has an interest rate of 7% per year. What will be your annual payment if you sign this mortgage? The annual payment will be $ (Round to the nearest cent.) You have a loan outstanding. It requires making seven annual payments of $2,000 each at the end of the next seven years. Your bank has offered to allow you to skip making the next six payments in lieu of making one large payment at the end of the loan's term in seven years. If the interest rate on the loan is 6%, what final payment will the bank require you to make so that it is indifferent to the two forms of payment? The final payment the bank will require you to make is $ (Round to the nearest cent.) 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 $2 million in its first year and that this amount will grow at a rate of 3% 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? The present value of the new drug is $ million. (Round to three decimal places.) You have an investment account that started with $1,50020 years ago and which now has grown to $9,000. a. What annual rate of return have you earned (you have made no additional contributions to the account)? b. If the investment account earns 17% per year from now on, what will the account's value be 20 years from now? a. What annual rate of return have you earned (you have made no additional contributions to the account)? Your annual rate of return is %. (Round to two decimal places.) You are thinking of purchasing a house. The house costs $448,000. You have $40,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 20-year mortgage that requires annual payments and has an interest rate of 7% per year. What will be your annual payment if you sign this mortgage? The annual payment will be $ (Round to the nearest cent.)

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

Handbook Of Research In Education Finance And Policy

Authors: Helen F. Ladd, Margaret E. Goertz

2nd Edition

0415838010, 978-0415838016

More Books

Students also viewed these Finance questions

Question

which of these services can be used to run code testing in cicd

Answered: 1 week ago