Walnut just bought a new cracker for $400,000.00. To pay for the cracker, the company took out a loan that requires Walnut to pay the bank a special payment of $55,000.00 in 3 months and also make regular monthly payments forever. The first regular payment is expected in 1 month and is expected to be $2,357.54. All subsequent regular payments are expected to increase by a constant rate each month forever. The interest rate on the loan is 1.05 percent per month. What is the monthly growth rate of the regular payments expected to be? O 0.59% (plus or minus 1 bps) O 0.68% (plus or minus 1 bps) O 0.37% (plus or minus 1 bps) O 0.46% (plus or minus 1 bps) O none of the answers are within 1 bps of the correct answer
Walnut just bought a new cracker for $400,000.00. To pay for the cracker, the company took out a loan that requires Walnut to pay the bank a special payment of $55,000.00 in 3 months and also make regular monthly payments forever. The first regular payment is expected in 1 month and is expected to be $2,357.54. All subsequent regular payments are expected to increase by a constant rate each month forever. The interest rate on the loan is 1.05 percent per month. What is the monthly growth rate of the regular payments expected to be? O 0.59% (plus or minus 1 bps) O 0.68% (plus or minus 1 bps) O 0.37% (plus or minus 1 bps) O 0.46% (plus or minus 1 bps) O none of the answers are within 1 bps of the correct answer
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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Transcribed Image Text:Walnut just bought a new cracker for $400,000.00. To pay for the cracker, the company took out a loan that requires Walnut to pay the bank a special payment
of $55,000.00 in 3 months and also make regular monthly payments forever. The first regular payment is expected in 1 month and is expected to be $2,357.54.
All subsequent regular payments are expected to increase by a constant rate each month forever. The interest rate on the loan is 1.05 percent per month.
What is the monthly growth rate of the regular payments expected to be?
O 0.59% (plus or minus 1 bps)
O 0.68% (plus or minus 1 bps)
O 0.37% (plus or minus 1 bps)
O 0.46% (plus or minus 1 bps)
none of the answers are within 1 bps of the correct answer
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