SOLUTION: Question 1 (15 marks)
a) Asset X generates a perpetual stream of cash flows of $100,000 every 3 months. The relevant
interest rate is 12%, compounded quarterly. How much would yo
Algebra.Com
Question 1200835: Question 1 (15 marks)
a) Asset X generates a perpetual stream of cash flows of $100,000 every 3 months. The relevant
interest rate is 12%, compounded quarterly. How much would you pay to buy Asset X today
if the first payment occurs right away? (5 marks)
b) You are considering depositing $1 million into a bank account. After one year, how much
more interest on interest will you find in Account (A) that provides an interest of 12%
compounded quarterly than Account (B) that provides an interest of 12% compounded semiannually?
(5 marks)
c) The Sharky Finance Ltd. has agreed to provide a loan to Meena on a “four-for-five” monthly
basis. That is, for every $4 Meena borrows today, she has to repay a total of $5 a month later.
What is the true yearly rate of this loan?
Answer by ikleyn(52781) (Show Source): You can put this solution on YOUR website!
.
One and ONLY ONE problem/question per post.
It is the RULE, the POLICY and the REQUIREMENT of this forum.
It is written in this page
https://www.algebra.com/tutors/students/ask.mpl?action=ask_question&topic=Equations&return_url=http://www.algebra.com/algebra/homework/equations/
from which you post your problems.
It is assumed that you read these rules before posting.
It is also assumed that you do understand what is written in that page and follow the rules.
Those who violate them, work against their own interests.
RELATED QUESTIONS
Asset X generates a perpetual stream of cash flows of $100,000 every 3 months. The... (answered by ikleyn)
Asset X generates a perpetual stream of cash flows of $100,000 every 3 months. The... (answered by Theo)
Find the cash price of a property if it is bought for $150,000 down payment and payments... (answered by proyaop)
Find the cash price of a property if it is bought for ₱150,000
downpayment and... (answered by yurtman)
H. LTD consolidated financial statement on 31 December 2020 was as follows;
Credit sales (answered by ikleyn)
Marie who is a business woman seeks to invest her money in any of two projects X and Y... (answered by Theo)
algebra.com a george monkey is in the process of negotiating his first contract. the... (answered by ikleyn)
There are two competing proposals for the redevelopment of a piece of vacant land in... (answered by Theo)
A yearly payment of 100, 000 pesos every end of each year starting at the end of 5 years... (answered by ikleyn)