Calculate the present value of the future payoff

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Reference no: EM131994126

On July 1, 2009 you borrowed $13,000 at 7.8% interest compounded semiannually. What amount will settle the debt on March 20, 2012? Assume that simple interest is paid for part of a period. Use the Banker’s rule when computing simple interest.

You invest $1000 today and expect to sell your investment for $2000 in 10 years.

a) Calculate the present value of the future payoff, if the interest rate is 6%. (Do not round intermediate calculations. Round your answer to two decimal places.)

b) Is this a good deal? Yes or No

c) Calculate the present value, if the interest rate is 10%. (Do not round intermediate calculations. Round your anser to two decimal places.)

d) Is this a good deal? Yes or No

Reference no: EM131994126

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