Q8. A owes B two sums of money: $1000 plus interest at 7% compounded annually, which is due infive years, and $2000 plus interest at 8% compounded semiannually, which is due in seven years. Ifboth debts are to be paid off by a single payment at the end of six years, find the amount of thepayment if money is worth 6% compounded quarterly.a) 4751.73b) 4700.73c) 4150.73d) 4771.73e) 4761.73

The concept of TVM states that money has an inbuilt capacity to earn interest because of which money…

Answered: Q8. A owes B two sums of money: $1000…

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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12. i) Calculate the amount received from a loan that charges interest in advance by 4% and must be repaid by P2000 at the end of three years. ii) If the present value in problem i is of P1778, what is the compound rate of interest in advance applied?
A man owes P5,000.00 today and agrees to discharge the debt by equal payments at the beginning of each 3 months for 8 years, where these payments include all interest at 10% payable quarterly. Find the quarterly payment. O a. P423.26 O b. P123.26 O c. P323.26 O d. P223.26
A man owes P50,000.00 with interest at 9% payable semi-annually. What equal payments at the beginning of each 6 months for 8 years will discharge his debt? O a. P4,529.11 O b. P4,295.11 O c. P4,259.11 O d. P4,359.11
What is the quarterly payment on a loan of $22,000 for 5 years at i= 8% per year, compounded semi-annually? Assume that interperiod cash flows earn compound interest (ABET, SO1) Select one: O a. 1220 O b. 1342 O c. 1281 O d. 1403 O e. 1464
5. Mr. Eden borrows from the bank P600, 000 at 12% pa compounded quarterly, agreeing to pay the loan in 10 equal quarterly payments. What should the quarterly payments be if the first payment is to be made 15 months from now? Select the correct response: O . P79,166.38 O P50,259.95 O P56,568.01 O P53,320.78
a. Set up an amortization schedule for a $19,000 loan to be repaid in equal installments atthe end of each of the next 3 years. The interest rate is 8% compounded annually.b. What percentage of the payment represents interest and what percentage representsprincipal for each of the 3 years? Why do these percentages change over time?
A man borrows S195,500 from a bank with interest at 7% compounded annually. He agrees to pay his obligations by paying 8 equal annual payments, the first being due at the end of 10 yearh. Find the annual payments. S60,203 b. S60,354 4. $60,487 d. S60,589 e. $60,758
47. A debt of P20,000 with interest at rate of 14% compounded semi- annually is to be amortized by 4 equal payments at the end of each 6 months; the first payment is to be made after 2 years. Find the semi- annual payment. O a. P5904.56 O b. P7233.34 O c. P6503.45 O d. P6256.30 e. None of the above
8.P6, 200.00 debts bear interest at 8% compounded annually. It is to be repaid in annual payments of P1, 000.00 each. a. How many payments must the debtor make? (8.9) b. How much will be the final payment if it is made one year the last P1, 000.00 payments. (P906.27)
A loan is to be amortized by equal payments of P500.00 each at the end of every six months for ten years. Interest is based on 7% compounded semiannually. What is the outstanding debt after eight years? Select one: a. P1,657.88 O b. No answer c. P2,034.29 d. P1,836.54 e. P1,976.87
13. A businessman borrowed P750,000 with interest at a rate of 7% compounded semi- annually. He agrees to discharge his obligation by paying a series of 6 equal semi-annual payments, the first being due at the end of 6 ½ years. Find the semi-annual payment?
Joshua borrowed P250,000.00 with interest at the rate of 5% compounded semi-annually. He agrees to discharge his obligation by paving a series of 8 equal semi-annual payments, the first being due at the end of 5 1/2 years. Find the semi-annual payment. O a. P68,006.38 O b P63,006.38 О с. P63,060.38 O d. P63,600.38

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