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Determine the lump sum payment

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MGMT2023 has been promised payments of $100 every month for the next five years. The first payment is to be made one month from now. The prevailing rate of interest is 12% per annum compounded monthly. However, MGMT2023 has opted to receive an equivalent lump sum payment at the end of three years from now.

(a) Determine the lump sum payment.

(b) What annual rate of interest compound monthly is equivalent to 12% per annum compounded quarterly?

(c) Using the results of your calculation from above or otherwise, determine the monthly payback on a loan of $74M taken by MGMT2023. The prevailing rate of interest is 12% per annum compounded quarterly. The duration of the loan is seven (7) years. MGMT2023 will be making monthly payments starting one month from now.

Reference no: EM133114323

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