You have the alternative of paying for university fees today for a payment of $16,000 or, you can select a payment plan where you pay $6,000 in 8 months from today and another $10,000 in exactly 24 months from today. If the interest rate is 4.6%p.a. compounding monthly, what is the advantage that the payment plan has over the upfront payment? (expressed in present day value rounded to the nearest cent; do not show $ sign or comma separators; if the payment plan is more costly than $16,000 today, your answer will show a negative eg. -300.35) Answer:
You have the alternative of paying for university fees today for a payment of $16,000 or, you can select a payment plan where you pay $6,000 in 8 months from today and another $10,000 in exactly 24 months from today. If the interest rate is 4.6%p.a. compounding monthly, what is the advantage that the payment plan has over the upfront payment? (expressed in present day value rounded to the nearest cent; do not show $ sign or comma separators; if the payment plan is more costly than $16,000 today, your answer will show a negative eg. -300.35) 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
Related questions
Question
![You have the alternative of paying for university fees today for a payment of
$16,000 or, you can select a payment plan where you pay $6,000 in 8
months from today and another $10,000 in exactly 24 months from today. If
the interest rate is 4.6%p.a. compounding monthly, what is the advantage
that the payment plan has over the upfront payment?
(expressed in present day value rounded to the nearest cent; do not show $
sign or comma separators; if the payment plan is more costly than $16,000
today, your answer will show a negative eg. -300.35)
Answer:
Jill borrows $300,000 for 10 years at a fixed interest rate of i % p.a (EAR). If
the loan is repaid in 10 equal year-end payments over the 10 years, the
amount of the loan outstanding at the end of the 5th year will be:
Select one:
O a. Less than $150,000
O b. Greater than $150,000
O c. Equal to $150,000
A prize pays $15,000 each quarter for 4 years (16 payments)commencing in
exactly 6 months' time. If the appropriate discount rate is 11.6% p.a
compounding quarterly, the value of the prize today is (round to nearest cent;
don't use $ sign or commas):
[HINT: the annuity is deferred]
a. $184514.15
O b. $189865.06
O c. $1369386.69
d. $41170.91](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F39f8c5c3-a714-421b-a3ab-4e7d7291a7e2%2F50309ebf-24ea-45dc-adbf-2df14b0c29b8%2F25lgav_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You have the alternative of paying for university fees today for a payment of
$16,000 or, you can select a payment plan where you pay $6,000 in 8
months from today and another $10,000 in exactly 24 months from today. If
the interest rate is 4.6%p.a. compounding monthly, what is the advantage
that the payment plan has over the upfront payment?
(expressed in present day value rounded to the nearest cent; do not show $
sign or comma separators; if the payment plan is more costly than $16,000
today, your answer will show a negative eg. -300.35)
Answer:
Jill borrows $300,000 for 10 years at a fixed interest rate of i % p.a (EAR). If
the loan is repaid in 10 equal year-end payments over the 10 years, the
amount of the loan outstanding at the end of the 5th year will be:
Select one:
O a. Less than $150,000
O b. Greater than $150,000
O c. Equal to $150,000
A prize pays $15,000 each quarter for 4 years (16 payments)commencing in
exactly 6 months' time. If the appropriate discount rate is 11.6% p.a
compounding quarterly, the value of the prize today is (round to nearest cent;
don't use $ sign or commas):
[HINT: the annuity is deferred]
a. $184514.15
O b. $189865.06
O c. $1369386.69
d. $41170.91
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