document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=1200835>Question 1200835</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Question 1 (15 marks)<BR>\n" );
document.write( "a) Asset X generates a perpetual stream of cash flows of $100,000 every 3 months. The relevant<BR>\n" );
document.write( "interest rate is 12%, compounded quarterly. How much would you pay to buy Asset X today <BR>\n" );
document.write( "if the first payment occurs right away? (5 marks)\r<BR>\n" );
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document.write( "b) You are considering depositing $1 million into a bank account. After one year, how much <BR>\n" );
document.write( "more interest on interest will you find in Account (A) that provides an interest of 12%<BR>\n" );
document.write( "compounded quarterly than Account (B) that provides an interest of 12% compounded semiannually?<BR>\n" );
document.write( "(5 marks)\r<BR>\n" );
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document.write( "c) The Sharky Finance Ltd. has agreed to provide a loan to Meena on a “four-for-five” monthly <BR>\n" );
document.write( "basis. That is, for every $4 Meena borrows today, she has to repay a total of $5 a month later. <BR>\n" );
document.write( "What is the true yearly rate of this loan? </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #835080 by </B><A HREF=/tutors/aboutme.mpl?userid=ikleyn><B>ikleyn(52781)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=ikleyn><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/cgi-bin/show-face.mpl?user=ikleyn><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=835080\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> .\r<BR>\n" );
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document.write( " </SPAN>\n" );
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