A. Ed Sloan wants to withdraw $25,000 (including principal) from an investment fund at the end of each year for five years. Compute his required initial investment at the beginning of the first year if the fund earns 8% compounded annually? HINT - Think of this as a standard ordinary annuity.
B. The market price of a $800,000, ten-year, 8% (pays interest annually) bond issue sold to yield an effective rate (i.e. market rate) of 10% is:
C. Elston Company has entered into a lease agreement for office equipment which could be purchased for $39,927. Elston Company has, however, chosen to lease the equipment for $10,000 per year, payable at the end of each of the next 5 years. Calculate the implied interest rate for the lease payments.