Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 4P
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Concept explainers
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Question
Dhofar Insurance Company has made an investment in another company that will guarantee it a cash flow of OMR 37250 each year for the next five years. If the company uses a discount rate of 15 percent on its investments, what is the present value of this investment
Select one:
a. 124867.77 OMR
b. 127107.50 OMR
c. 127107.50 OMR
d. None of these
e. 120680.04 OMR
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