You are about to begin your last year of college, in 12 months you will be a graduate engineer. You have studied hard the last three years and now intend to "have some fun" this last year. You know that your Grandpa will give you a fat check at your graduation, but you need some money now for the fun you plan to have, so you ask your "friend" Billy to lend you $2,000 which you will pay back in 13 months. Billy agrees to lend you the money but wants to charge an APR of 25% to be compounded monthly. 1. How much will the availability of the $2,000 for 13 months cost? How much you will have to pay back at the end of the 13th month? 2. Show the cash flow of this transaction 3. Show the distribution of debt over the 13 months period
You are about to begin your last year of college, in 12 months you will be a graduate engineer. You have studied hard the last three years and now intend to "have some fun" this last year. You know that your Grandpa will give you a fat check at your graduation, but you need some money now for the fun you plan to have, so you ask your "friend" Billy to lend you $2,000 which you will pay back in 13 months. Billy agrees to lend you the money but wants to charge an APR of 25% to be compounded monthly. 1. How much will the availability of the $2,000 for 13 months cost? How much you will have to pay back at the end of the 13th month? 2. Show the cash flow of this transaction 3. Show the distribution of debt over the 13 months period
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
Related questions
Question
Do step by step do not solve on excel
Transcribed Image Text:You are about to begin your last year of college, in 12 months you will be a graduate engineer. You have
studied hard the last three years and now intend to "have some fun" this last year. You know that your
Grandpa will give you a fat check at your graduation, but you need some money now for the fun you
plan to have, so you ask your "friend" Billy to lend you $2,000 which you will pay back in 13 months. Billy
agrees to lend you the money but wants to charge an APR of 25% to be compounded monthly.
1. How much will the availability of the $2,000 for 13 months cost? How much you will have to pay
back at the end of the 13th month?
2. Show the cash flow of this transaction
3. Show the distribution of debt over the 13 months period
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education