Business, 03.04.2021 04:30 jeffffffff

Your money is tied up and you need to borrow $10,000. The following two alternatives are being offered by the lender: (1) pay $3,288.91 at the end of each year for 5 years, starting at the end of the first year (5 payments total at 18 percent nominal per year compounded quarterly which equates to 19.25% effective); or (2) pay $X at the end of each quarter for 6 years, starting at the end of the first quarter (24 payments total at 18 percent nominal per year compounded quarterly). Determine the value of $X that will make Alternative 2 equally desirable to Alternative 1 if a. your TVOM is 8% nominal per year compounded.
b. your TVOM is 22% nominal per year compounded quarterly.

Answers: 3

Show answers

Another question on Business

Business, 22.06.2019 20:00

A$100 million interest rate swap has a remaining life of 10 months. under the terms of the swap, the six-month libor is exchanged semi-annually for 12% per annum. the six-month libor rate in swaps of all maturities is currently 10% per annum with continuous compounding. the six-month libor rate was 9.6% per annum two months ago. what is the current value of the swap to the party paying floating? what is its value to the party paying fixed?

Answers: 2

Answer

Business, 22.06.2019 20:10

Quick computing currently sells 12 million computer chips each year at a price of $19 per chip. it is about to introduce a new chip, and it forecasts annual sales of 22 million of these improved chips at a price of $24 each. however, demand for the old chip will decrease, and sales of the old chip are expected to fall to 6 million per year. the old chips cost $10 each to manufacture, and the new ones will cost $14 each. what is the proper cash flow to use to evaluate the present value of the introduction of the new chip? (enter your answer in millions.)

Answers: 1

Answer

Business, 22.06.2019 21:00

In a transportation minimization problem, the negative improvement index associated with a cell indicates that reallocating units to that cell would lower costs.truefalse

Answers: 1

Answer

Business, 22.06.2019 22:50

For 2016, gourmet kitchen products reported $22 million of sales and $19 million of operating costs (including depreciation). the company has $15 million of total invested capital. its after-tax cost of capital is 10%, and its federal-plus-state income tax rate was 36%. what was the firm’s economic value added (eva), that is, how much value did management add to stockholders’ wealth during 2016?

Answers: 1

Answer

You know the right answer?

Your money is tied up and you need to borrow $10,000. The following two alternatives are being offer...

Questions