Question
You were given the cash flows for two investment (A,B), choose the best investment by Calculating the present value for each one, assuming a 10%
Calculating the present value for each one, assuming a 10% discount rate. (4 points)
End of Year | Investment A | Investment B |
1 | 300 |
|
2 | 300 | 350 |
3 | 300 | 350 |
4 |
| 350 |
5 |
|
|
2- Suppose a firm wants to purchase a piece of machinery. To do this it borrows 150,000 to be repaid in 3 equals payments at the end of each year. The interest rate that is paid to the lender is 15% on the outstanding portion of the loan. Calculate the loan balance after the payment of each annuity by using the loan amortization schedule. (4Points)
3- An investor wants to earn 200,000 in 10 years by making equal semi-annual deposits at the beginning of each. The bank will pay an interest of 10 percent annually. What must the semi-annual deposit be? (2 point)
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