You are considering taking out a two-year loan of$1,000 from a bank, on which you can pay eithercompound yearly interest of 1 percent or a flat rateof 2 percent for the whole two-year period. Whichoption is a better deal, and why?

Q: a. The present value of $25,000 each year for 4 years at a / percent interest rate b. The present…

A: The formula for calculating the Future Value is: FV= PV(1+r)nwhere,FV= Future ValuePV= Present…

Q: Your financial adviser recommends buying a 10-year bond with a face value of $1,000 and an annual…

A: We have  Face value of the coupon bond FV =$1000 annual coupon payment (C) =$55 Year of maturity (n)…

Q: Cindy is considering going to law school. If she does, she will spend $70,000 on tuition and books…

A: In economics, present value refers to the current value of a future stream of cash flow. Future…

Q: Robert wins $5,000,000 at the lottery; however, he is not going to receive the full prize…

A: To find the present value of future cash inflows, we discount the values of future cash inflows with…

Q: "You are interested in buying a piece of real property that could be worth $313,000 in 15 years.…

A: Here, we calculate the given as follow;

Q: How much do you need to save each year for 30 years in order to have $775,000, assuming you are…

A:

Q: You have a habit of drinking a cup of Starbuck coffee ($2.00 a cup) on the way to work every morning…

A: The price of a Starbuck coffee = $2 per cup Number of year = 30 years Interest earned = 5% Per day…

Q: If a bank offers an investment opportunity for which the interest is compounded quarterly, and you…

A: The nominal interest rate alludes to the financing cost prior to considering expansion. nominal can…

Q: You are offered to buy a 4 year coupon corporate bond at the beginning of its 7th month on its third…

A: Given: There is a coupon corporate bond for = 4 years Beginning of its 7th month on its third year…

Q: Bond A pays $8,000 in 20 years. Bond B pays $8,000 in 40 years. (To keep things simple, assume these…

A: The number of years (n) required to double the investment can be calculated by using the following…

Q: Say that a bond pays $12 in interest and has a current price on secondary markets of $132. Then the…

A: here we can find the current yield of bond as follow

Q: ADVANCED ANALYSIS To fund its wars against Napoleon, the British government sold consol bonds. These…

A: A perpetual bond , also called consol bond signifies a bond who yields a fixed amount of income for…

Q: A Bank offers you a 250,000 pesos, 3 years and 6 months term loan at 4. 78 percent annual interest.…

A: PV = 250,000 N = 42 Months r = 0.0478/12 = 0.0039833

Q: True or False: When you hold a bond to maturity, you can cash it in for its face value. O True False

A: When we hold any bond till its maturity then we get an interest rate on this and the total amount we…

Q: 10. Suppose the interest rate is 5% and that you are to receive three annual payments of $10,000,…

A: The present value is an important financial concept popularly used by business firms and individuals…

Q: 6) What is the present value of $500.00 to be paid in two years if the interest rate is 5 percent?

A: The present value (PV) is the current value of a future sum of money or stream of cash flows given a…

Q: You can invest in an account that pays simple interest or an account that pays compound interest. In…

A: We need to solve the simple interest amount as well as compounding interest amount with given…

Q: Bond A pays $8,000 in 20 years. Bond B pays $8,000in 40 years. (To keep things simple, assume that…

A: The interest rate is given as 3.5% The present value of the bonds can be calculated from the…

Q: Suppose you make an annual contribution of $5,000 to your savings account at the end of each year…

A: Future value can be calculated as follows: Future…

Q: How much money will you have in seven yearsif you deposit $7,000 in the bank at 8.5%…

A: Compound interest rate is addition to the interest of interest. It can be applicable both loan and…

Q: ran Lee plans to set aside $2,600 a year for the next seven years, earning 3 percent. What would be…

A: Investors can forecast the potential profit from various investments with differing degrees of…

Q: If the interest rate is zero, then $100 to be paid in10 years has a present value that isa. less…

A: The present value refers to the today’s value of the future amount that adjusted with the existing…

Q: Akhisha wanted to buy a cell phone which will have a price of P13,000 for 90 days from now due to…

A: Given  The future value of cell phone 60 days from now = P13000 Rate of interest =12% simple…

Q: 5. Suppose after you graduate from Algoma University, you find a job that pays you $75,000 a year.…

A: Case-1 no.of years n=30years=30*12=360months   Interest rate (i) =3.5% per year = 0.35/12 = 0.00292…

Q: What is the present value of the right to receive $11,000 in four years at an interest rate of 10.0…

A: Given information, Future value (F): $11,000 Time period (t): 4 years Interest rate (r): 10% To…

Q: Suppose a state lottery prize of $2 million is to be paid in 20 payments of $100,000 each at the end…

A: Present value can be calculated by using the following formula.

Q: When you take your job, you decide to start saving for your retirement. You put $5,000/yr into the…

A: Monthly investment A= 5000 Rate of interest = 8% / year We have to calculate the amount of total…

Q: 2. On May 11, 1993, a note due on January 10, 1994 was discounted at 12.12% simple discount. Find…

A: Definition: a discount rate is a pace of getting used to limit future incomes once again to their…

Q: Consider a coupon bond that has a par value of $1,100 and a coupon rate of 10%. The bond is…

A:

Q: 57. Behavioral economics suggests that incentivizing people to save more of their income: A) entails…

A: Behavioral economics is a branch of economics that combines psychology and economics to study how…

Q: If Reybien got a character loan of P10,000 from a bank with 18 percent interest per annum, how much…

A: The principal amount is given which is 10,000. We are required to find out the amount of interest…

Q: An investment promises to pay into an account that pays you 6 percent annually, $150 per month for…

A: $150 per month. Therefore for one year 150*12=$1800.

Q: Compute the future value of $10,000 at an interest rate of 10 percent 5, 10, and 15 years into the…

A: Given  Present value P = $10,000 We have to calculate the future value  Formula for future value is…

Q: taxable bond has a yield of 9%, and a municipal bond has a yield of 6.5%. If you are in a 30% tax…

A: Answer a. Which bond will be preferred can be calculated by using the following formula of corporate…

Q: 1. Suppose you win a small lottery and you are given the following options: You can receive (1) an…

A: Given:Immediate Payment=$5,000Rate of Interest=6%Number of years=2years

Q: Consider a 25-year loan with an annual interest rate of 7 percent and monthly payments of $1,201.53.…

A: In the mentioned question we have to calculate the values of loan amount, Lender's IRR and also we…

Q: of each year. If the interest rate is 5 percent, determine the present value of the stream of:…

A: Accounting profit does not account for implicit cost while the economic profit account for the…

Q: 35. Which of the following is the correct way to compute the future value of $100 put into an…

A: The future value can be given as:  F = P (1 + R)t Where: P : Present value F: Future valueR :…

Q: 1. You have choice when subscribing to our magazine for four years: you can a)pay $100 now for a…

A: As per answering guidelines, can answer only one question.  Answering the first one.

Q: Exercise 2.3 at pg24: Say you barrowed $10,000 from a bank at 12% interest rate per year for a…

A: a)10,000*10=1,00,000 Interest 12% 1200*10=12,000 Therefore 1,00,000+12,000=1,12,000

Q: Suppose you think if you were to retire right now, you would have needed $50,000 each year to…

A: The figures for the actual amount of money that inflation can cost seniors are staggering. The LIMRA…

Q: )You recently obtained a $135,000, 30-year mortgage with a nominal interest rate of 7.25 percent.…

A: The payments of mortgage are described as a summation of interest payments and the principal. For…

Q: (Present Value of an Annuity) Why is $10,000 a close approximation of the price of an annuity that…

A: Present Value of an Annuity) Why is $10,000 a close approximation of the price of an annuity that…

Q: 29. You purchase a $1,000 face-value bond for $800. The coupon is $100 per year, and inflation is 4…

A: As per given information, Investment Amount  = $ 800 Return                       = $ 100 So, Rate…

Q: What refers to the cost of borrowing money or the amount earned by a unit principal per unit time?…

A: Investment is any asset in which an investor invests in order to earn profit expecting increase in…

Q: 2. Greg wants to have $50 000 in five years. He has $20 000 today to invest. The bank is offering…

A: 2.Given that   Greg wants to have $50,000 in five years.  He has $20,000 today to invest.  Time = 5…

Q: What is the present value of the right to receive a payment of $36,000 at the end of every year for…

A: Given information, Future value (F): $36,000 Discount rate (r): 8% Time period (t): 15 years To…