It is c. Because most banks don't offer letters of credit.
Answer:
Today, the funder will invest 342,741.82 dollars
Explanation:
We invest on a lump sum of STRIPS which yield 6% with semiannual compounding.
Our target is 550,000 in eight years and each STRIPS is valued at 5,000
The STRIP is the coupon payment or maturity payment of a bond which sales like a zero coupon bond so we need to discount the 550,000 at the market rate to know the market price of the STRIPS:
Maturity $550,000
time 16.00 (8 years x 2 compounts per year)
rate 0.03 ( 6% annual divide into 2 to get semiannual rate)
PV 342,741.82
Answer:
$280,894.67
Explanation:
Present value can be found by discounting the cash flows at the discount rate.
Present value can be calculated using a financial calculator:
Cash flow for year one = 5,600
Cash flow for year two = $48,200
Cash flow for year three = $125,000 + $250,000 = $375,000
Discount rate =16%
Present value = $280,894.67
I hope my answer helps you
B - they must minimise the threats