2. A present obligation of $20,000 is to be repaid in equal uniform annual amounts, each of which includes repayment of the debt principal and interest on the debt, over a period of five years. If the interest rate is 10% per year, what is the amount of the annual repayment?

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter16: The Markets For Labor, Capital, And Land
Section: Chapter Questions
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2. A present obligation of $20,000 is to be repaid in equal uniform annual
amounts, each of which includes repayment of the debt principal and
interest on the debt, over a period of five years. If the interest rate is 10%
per year, what is the amount of the annual repayment?
3. You have an investment opportunity that costs $35,000 and eight years
later pays a lump-sum amount of $100,000. What interest rate per year
would be earned on this investment?
Transcribed Image Text:2. A present obligation of $20,000 is to be repaid in equal uniform annual amounts, each of which includes repayment of the debt principal and interest on the debt, over a period of five years. If the interest rate is 10% per year, what is the amount of the annual repayment? 3. You have an investment opportunity that costs $35,000 and eight years later pays a lump-sum amount of $100,000. What interest rate per year would be earned on this investment?
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