Find the amount of each quarterly interest payment

Assignment Help Financial Management

Reference no: EM131347678

A woman is selling some land, and she will be paid a lump sum of $80,000 in 6 years. Until then, the buyer pays 7% simple interest quarterly.

(a) Find the amount of each quarterly interest payment.

(b) The buyer sets up a sinking fund so that enough money will be present to pay off the $80,000. The buyer wants to make semiannual payments into the sinking fund; the account pays 6% compounded semiannually. Find the amount of each payment into the fund.

Reference no: EM131347678

Questions Cloud

Compute the crossover rate : XYZ Airways is considering two mutually exclusive projects, Project A and Project B. The projects have the following cash flows: Year Project A Project B 0 -$42,000 -$45,000 1 14,000 28,000 2 14,000 12,000 3 14,000 10,000 4 14,000 10,000 5 14,000 10,..

What is aftertax cost of debt and pretax cost of debt : ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with ten years to maturity that is quoted at 113.5 percent of face value. The issue makes semiannual payments and has an embedded cost of 9.6 percent ann..

What is your best estimate of the company cost of equity : Stock in CDB Industries has a beta of .92. The market risk premium is 7.2 percent, and T-bills are currently yielding 4.2 percent. CDB’s most recent dividend was $2.10 per share, and dividends are expected to grow at an annual rate of 5.2 percent ind..

What would be the required rate of?return : Carlson? Enterprises' common stock dividend is expected to grow at 5% per year. The dividend recently paid was $ 0.28 per? share, and the required return is 9 %. If the value of a common stock was $93 per share and dividends were recently$2.59?, but ..

Find the amount of each quarterly interest payment : A woman is selling some land, and she will be paid a lump sum of $80,000 in 6 years. Until then, the buyer pays 7% simple interest quarterly. Find the amount of each quarterly interest payment.

What is the company total market value of debt : Jiminy’s Cricket Farm issued a 30-year, 6 percent semiannual bond 3 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 40 percent. What is the company’s total book value of debt? What is the company’s tota..

Find the entire office suite flooded from overhead sprinkler : Estimate of Loss. You are the practice manager for a four-physician office. You arrive on Monday morning to find the entire office suite flooded from overhead sprinklers that malfunctioned over the weekend. Water stands ankle-deep everywhere. How wou..

Zero coupon treasury bonds for years : On March 11, 20XX, the existing or current (spot) 1-, 2-, 3-, and 4-year zero coupon Treasury security rates were as follows: 1R1 = 0.55%, 1R2 = 1.15%, 1R3 = 1.55%, 1R4 = 1.70% Using the unbiased expectations theory, calculate the 1-year forward rate..

Calculate the monthly payment and amount financed : Find a vehicle for sale online that you would like to buy then calculate the Monthly Payment (MP), Amount Financed (AF), Finance Charge (FC), and Deferred Payment Price (DPP).

User Account

All Pages