How large is new annual payment

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1. The common stock of Lester Lithographics is expected to earn 9 percent in a recession, 7 percent in a normal economy, and lose 2 percent in a booming economy. The probability of a boom is 5 percent while the probability of a recession is 50 percent. What is the expected rate of return on this stock?

2. Robert is repaying a debt with 22 annual payments of 900 dollars each, the first coming a year from now. At the end of the 4th year, he makes an extra payment of 1800 dollars. He then shortens his remaining payment period by 2 years, and makes level payments over the remaining time. If the effective rate of interest is 9.5 percent, how large is his new annual payment? Answer = dollars. (3 decimal place)

Reference no: EM131905685

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