7-year, $5,000 promissory note bearing interest at j12-7.20% was sold to a buyer after 2 years. The buyer purchased the note at a price that would yield them j4=6.00%. a) Calculate the maturity value of the note: b) Calculate the price the buyer paid (at the 2 year mark): c) What rate did the original holder of the note earn over the 2 year period that they held it? Express your answer as an annual effective rate (j1) to 2 decimal places. Do not include the % symbol.

7-year, $5,000 promissory note bearing interest at j12-7.20% was sold to a buyer after 2 years. The buyer purchased the note at a price that would yield them j4=6.00%. a) Calculate the maturity value of the note: b) Calculate the price the buyer paid (at the 2 year mark): c) What rate did the original holder of the note earn over the 2 year period that they held it? Express your answer as an annual effective rate (j1) to 2 decimal places. Do not include the % symbol.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

9. The Sample Company discounts a $100,000 note receivable on 15 May 20x2. The following facts are known: Date of signing 3/31/x2 Due date 6/30/x2 Interest rate 8% per year Discounted on 5/15/x2 Discount rate 12% per year Find the following: a) Maturity value b) Proceeds
17. Walnut company received from a customer an 1-year, P200,000 note bearing annual interest of 8%. After holding the note for 8 months,Walnut discounted the note at a local bank at an effective rate of 12%. What is the maturity value of the note? a. 216,000 b. 169,500 c. 200,000 d. 226,000
Lime Co. incurs a $4,000 note with equal principal installment payments due for the next eight years. What is the amount of the current portion of the noncurrent note payable due in the second year? A. $800 B. $1,000 C. nothing, since this is a noncurrent note payment D. $500
On July 1, 20X1, ABC Corp received a P450,000 10% 3-year note from a customer. The principal and interest of the note is collectible in 3 equal payments every June 30, starting June 30, 20X2. How much is the Interest Receivable at Dec 31, 20X1? 22,500 45,000 135,000 0
5-26. (Future value of an annuity) In 20 years you are planning to retire and buy a house in Nevada City, California. The house you are looking at currently costs $150,000 and is expected to increase in value at a rate of 5 percent annually. Assuming you can earn 10 percent annually on your investments, how much must you invest at the end of each of the next 20 years to be able to buy your dream house when you retire?
KE A non interest bearing promissory note for $1484 00 was discounted at 3% pa. compounded monthly. If the proceeds of the note were $1365.00, how long before the due date was the note discounted? State your answer in years and months (from 0 to 11 months) The note was discounted year(s) and month(s) before the due date
On Jan 1, 20X1, ABC Corp received a P300,000 3-year note from a customer. The principal and interest of the note is collectible annually starting Dec 31, 20X1. Effective interest rate is 10% . How is the value of the note at December 31, 20X1? PV of P1 at 10% for 3n = .75131 PV of ordinary annuity of P1 at 10% for 3n = 2.48685 248,685 200,000 173,553 100,000
Lime Co. incurs a $4,000 note with equal principal installment payments due for the next eightyears. What is the amount of the current portion of the noncurrent note payable due in the second year?A. $800B. $1,000C. $500D. nothing, since this is a noncurrent note payable
Happy Company sold a machine in exchange for a P750,000, 5-year, 14% note; interest is payable annually. How much is the total amount of interest collected for this note for 5 years? tart How much cash will be collected at the end of the term of the note? ssments ( Previous rences fessors

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