None 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?

Problem Overview:You are offered a financial asset that will pay **$10,000 in 4 years** and is…

Answered: A financial asset that is guaranteed to…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 9P

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What is the future value of $118,000 invested for 5 years at 11% compounded monthly? (a) State the type. A. ordinary annuityB. present value C. amortizationD. sinking fundE. future value (b) Answer the question. (Round your answer to the nearest cent.)
Classify the financial problem. Assume a 4% interest rate compounded annually. Find the value of a $1,000 certificate in 6 years. A. amortizationB.ordinary annuity C.present valueD. sinking fundE.future value Answer the question. (Round your answer to the nearest cent.)
Use aspreadsheet to create amortization schedules for the following five scenarios.What happens to the total interest paid under each scenario?a. Scenario 1:Loan amount: $1 millionAnnual rate: 5 percentTerm: 360 monthsPrepayment: $0b. Scenario 2: Same as 1, except annual rate is7 percentc. Scenario 3: Same as 1, except term is 180monthsd. Scenario 4: Same as 1, except prepayment is$250 per monthe. Scenario 5: Same as 1, except loan amount is$125,000
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2. Calculate the present value to purchase a lot of land if $18,000 is put down and $2,000 is paid per quarter for 3 years. Assume that there is 6% interest that is compounded quarterly if the cash price for the land is 825, 000, is it better to pay cash or finance the purchase? According to the Present Value of an Annuity Table, at 1.5% interest for 5 years, the factor is 17.16564 O $52,337,28, it is better to pay $25,000 cash 14.782.64 is better to finance the purchase $27, 565.28 at is better to pay $25,000 cash O822,782.64 it is better to finance the purchase "At (harger Canad
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D, E, F
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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?