11. If $10,000 is invested today in an account of Faisal Islamic Bank of Egypt that earns interest at a rate of 12.5%, what is the value of the equal withdrawals that can be taken out of the account at the end of each of the next six years if the investor plans to deplete the account at the end of the time period? A. $2,466. B. $2,604. C. $2,750. 12. An investor is to receive a 15-year, $8,000 annuity, with the first payment to be received today. At an 11% discount rate, this annuity's worth today is closest to: A. $55,855. B. $57,527. C.$63,855.

11. If $10,000 is invested today in an account of Faisal Islamic Bank of Egypt that earns interest at a rate of 12.5%, what is the value of the equal withdrawals that can be taken out of the account at the end of each of the next six years if the investor plans to deplete the account at the end of the time period? A. $2,466. B. $2,604. C. $2,750. 12. An investor is to receive a 15-year, $8,000 annuity, with the first payment to be received today. At an 11% discount rate, this annuity's worth today is closest to: A. $55,855. B. $57,527. C.$63,855.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 2STP

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

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