Answer:
The answer is 9.00%
Explanation:
real risk-free rate = 3.00%
average expected future inflation rate = 5.90%
Maturity risk premium = 0.10%
The expected rate of return on a 1 year treasury security would be = the average expected future inflation rate + maturity risk premium + real risk-free rate.
= 3.00% + 5.90% + 0.10%
= 9.00%
Answer:
The annual payment at the end of each year: $4,572.23
Explanation:
The formular for calculating Present value of Annuity is applied in this case to help us find the equal annual payment.
Applying information in the question, we have the annuity that have:
n= 10 as there are 10 equal annual payments paid at the end of each year during 10 years;
i = 8.5% per annum compounded annually, as stated in the question;
PV = Borrowed amount = $30,000;
C = the equal annual payment.
The formular for PV of Annuity: PV = (C/i) x [ 1- (1+i)^(-n)] <=> C = (PV x i) / [ 1- (1+i)^(-n)]
Thus, C = (30,000 x 8.5%) / [ 1- 1.085^(-10) ] = $4,572.23
Answer:
175$-348.80$
Explanation:
sorry if you get the answer wrong .
Answer:
I will choose Project B
Payback period of Project A is 4.2 years
Explanation:
IRR shows the percentage rate at which the net present value of the cash flows are zero. The more IRR rate of the project the more beneficial it is.
IRR
Project A = 31%
Project B = 38%
In this Question the IRR of Project B is higher so, it will be more beneficial and I will select it based on IRR ignoring all other factors.
Payback period of Project A is 4.2 years means 4 years, 2 months and 12 days.
