Need answer please A financial asset that is guaranteed topay $10,000 in one lump sum in 4 yearsis offered for a price of $8,000. Infinancial terms, is this a good dealassuming that an account thatguarantees 4.8% annual interest,compounded monthly, is the bestalternative use of the funds?

Step 1: Given Value for Calculation Compound = Monthly = 12 Time = t = 4 * 12 = 48Present Value = pv…

Answered: A financial asset that is guaranteed to…

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

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A financial asset that is guaranteed to pay $10,000 in one lump sum in 4 years is offered for a price of $8,000. In financial terms, is this a good deal assuming that an account that guarantees 4.8% annual interest, compounded monthly, is the best alternative use of the funds?