Need help on the following question:
I. You are offered the opportunity to buy a note for $12,800.The note is certain to pay $2,000 at the end of each of the next 10 years.If you buy the note, what rate of interest will you receive? 1 Assume capital markets are perfect.
II. You need $25,000 ?ve years from now.
1. If you budget to make equal payments at the end of every year into an account that pays an annual interest rate of 7 percent, what are your annual payments?
2. Now assume you have up to $20,000 today to set aside in savings. How much of it must you put into the same account as a lump sum today to meet your goal?
Please provide step-to-step solutions on all calculations.
Need help on the following question:
I. You are offered the opportunity to buy a note for $12,800.The note is certain to pay $2,000 at the end of each of the next 10 years.If you buy the note, what rate of interest will you receive?1 Assume capital markets are perfect.
II. You need $25,000 ?ve years from now.
1. If you budget to make equal payments at the end of every year into an account that pays an annual interest rate of 7 percent, what are your annualpayments?
2. Now assume you have up to $20,000 today to set aside in savings. How much of it must you put into the same account as a lump sum today to meet your goal?
Please provide step-to-step solutions on all calculations.