Indifferent to the two forms of payment

Assignment Help Financial Management
Reference no: EM131456315

You have a loan outstanding. It requires making three annual payments of $3000 each at the end of the next 7 years. Your bank has offered to restructure the loan so that instead of making the three payments as originally agreed, you will make only one final payment in 7 years. If the interest rate on the loan is 8% what final payment will the bank require you to make so that it is indifferent to the two forms of payment?

Reference no: EM131456315

Questions Cloud

Calculate the number of full-time equivalents : Calculate the number of full-time equivalents (FTEs) that would be needed. Show your calculations.
Examine and discuss competitive strategies : Examine and discuss competitive strategies that manufacturers can use to gain competitive advantage.
Briefly explain risk and return relationship for security : First, locate the financial statement (10 - K Annual Reporting) information for each company (listed below) This information can be found on each company's.
Discuss the major forms of sources and surveillance : Discuss the major forms of sources and surveillances that are employed to gather information and develop intelligence in terrorism.
Indifferent to the two forms of payment : If the interest rate on the loan is 8% what final payment will the bank require you to make so that it is indifferent to the two forms of payment?
Why does the approach to team-building work : Why does this approach to team-building work? How might the "jazz metaphor" be useful for teams? How might this approach be applied to other situations?
Mortgage from the local savings and loan : Yale Mortgage Purchasing Company (YMPC) wants to buy your mortgage from the local savings and loan.
Develop a plan and a strategy for a company : CIB3303- E-Business Principles Computer and Information Science Division (CIS). develop a plan and a strategy for a company that you are willing to build in UAE
What is the annual percentage rate on the loan : You are the owner and operator of Grains Plus located at Bathurst NSW. The rain during the spring have been the best in a decade and you are expecting.

Reviews

Write a Review

Financial Management Questions & Answers

  What is socially optimal level of firm pollution reduction

Two firms are ordered by the federal government to reduce their pollution levels. Firm A’s marginal costs associated with pollution reduction is MC = 150 + 3Q. Firm B’s marginal costs associated with pollution reduction is MC = 10 + 9Q. The marginal ..

  Find annual financing cost before considering cost savings

Determine the annual financing cost, before considering cost savings and bad-debt losses. Determine the annual financing cost, after considering cost savings and bad-debt losses.

  Why are retirement accounts more beneficial

Why are retirement accounts more beneficial than other investments that could be used for retirement? Describe an effective strategy for retirement planning.

  What is the market price of this stock if the market rate

The Extreme Reaches Corp. last paid a $1.50 per share annual dividend. The company is planning on paying $3.00, $5.00, $7.50, and $10.00 a share over the next four years, respectively. After that the dividend will be a constant $2.50 per share per ye..

  Voice recognition computer keyboards year for four years

Your company has been approached to bid on a contract to sell 5, 100 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. Additionall..

  What is your required return in order to invest

Apple Computers just paid a dividend of $6.94 and is expected to grow at 5%. You have estimated their beta at 0.95, with a risk free rate of 2.5% and equity risk premium of 6%. What is their current market value? You are valuing stock in Tofrandi Nat..

  Which will be depreciated straight line over the next 5 year

The project requires a new plant that will cost a total of $1,500,000, which will be a depreciated straight line over the next 5 years.

  Market portfolio in your new optimal portfolio

We also know that the correlation coefficient between US and UK market portfolios is ρUS,UK = 0.5 and the correlation coefficient between US and Japan is ρUS,Japan = 0.266. Suppose that the risk-free rate is Rf = 5%. You currently hold a portfolio wi..

  Retained earnings break point for marginal cost of capital

Rolodex Inc. Balance Sheet (in millions) shows retained earnings of $110 and $20 Common Stock (20 million shares at par). Rolodex expects to generate $140 million in net income and pay $2 per share in dividends. What is Retained Earnings for the purp..

  Fund used by a not-for-profit as a safety reserve

Do you think that a not-for-profit organization’s board can release the restrictions on money in a strike fund and use it for general operations? Does it matter whether we are talking about a strike fund held by a steel workers’ union to pay benefits..

  What will be the market price of such bond

A firm is planning to issue $50 million debts. Each bond will have a par value of $1,000, a coupon of 9% paid annually, and maturity period of 25 years. If the market rate for such bond is 12%, what will be the market price of such bond and how many ..

  Discount is offered-the operating cycle will decrease

Jordan and Sons has an inventory period of 48.6 days, an accounts payable period of 36.2 days, and an accounts receivable period of 29.3 days. Management is considering offering a 5 percent discount if its credit customers pay for their purchases wit..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd