Calculate the duration of two-year corporate loan

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1. You're trying to determine whether or not you should expand your business at a fixed asset cost of $2,540,000. The firm uses straight-line depreciation to zero over the project life. The projected annual net income is $210,000, $315,000, $350,000, and $375,000 over these four years. What is the average accounting return?

2. Calculate the duration of a two-year corporate loan paying 6 percent interest annually, selling at par. The $30,000,000 loan is 100 percent amortizing with annual payments.

Reference no: EM131933557

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