Loan with an annual effective interest rate

Assignment Help Financial Management
Reference no: EM131065183

John takes out a 2000 10-year loan with an annual effective interest rate of 20%. The principal amount of the loan will be repaid with 10 equal size yearly payments made at the end of each year. The interest accrued on the loan will be repaid with yearly payments occurring at the end of each year. The first interest payment is for X and each subsequent interest payment will be twice as large as the previous interest payment. After 10 years, the loan and interest accrued are completely paid off. Note: The resulting size of X will result in a capitalization of interest on this loan. Find X.

Reference no: EM131065183

Questions Cloud

Calculate the mean median mode and standard deviation : Calculate the mean, median, mode and standard deviation for the salaries rounded up to the nearest thousand of dollars
Maturity of repriced option will equal remaining maturity : Patriot Corp. compensates executives with 10-year European call options which is granted at-the-money. If there is a signi?cant drop in the share price, the company’s board will reset the strike price of the options to equal the new share price. Then..
Mind, bodies and personal identity : 2. Consider the 'official doctrine' summarized by G. Ryle early in his article: the mind-body separation and incompatibility. For each of the properties listed below, identify it as belonging to (applying to) the mind (as consciousness) or to the ..
Proposed logical system for the transport management : Proposed logical system for the transport management - A Data Model detailing the data nucture reguLred to support the current reformation and process requirements
Loan with an annual effective interest rate : John takes out a 2000 10-year loan with an annual effective interest rate of 20%. The principal amount of the loan will be repaid with 10 equal size yearly payments made at the end of each year. The interest accrued on the loan will be repaid with ye..
What is its percentage after-tax cost of debt : Micro Spinoffs Inc. issued 20-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,380. If the firm’s tax bracket is 20%, what is its percentage after-tax cost of debt? Assume a face value of $1,..
What is the required rate of return on this stock : The current dividend yield on Phillips common stock is 2.8 percent. The company just paid a $1.48 annual dividend and announced plans to pay $1.54 next year. The dividend growth rate is expected to remain constant at the current level. What is the re..
Determine the factor of safety with respect to yielding : Calculate the maximum compressive stress in the column.
Identifying potential root causes for difficulties : Describea health problem that negatively impacts a particular subpopulation in the United States, identify the root cause(s), and give examples where application of Biblical principles have led or should lead to improved health status.

Reviews

Write a Review

Financial Management Questions & Answers

  What is the annual interest rate when calculating part

Samantha has come to you for advice on her retirement planning. She is currently 55 years old and intends to turn her $675,000 current savings into an immediate annuity. Assume the annuity has a 5.00 percent annual interest rate, and is distributed a..

  Problem 1on completion of mba eddie and mike were so

problem 1on completion of mba eddie and mike were so pleased with the amount of useful and interesting knowledge that

  Defensive open market operations are used to

Defensive open market operations are used to _____. Because timely information on the price level and economic growth is frequently unavailable, the Fed has adopted a strategy of _____. The primary motivation behind the creation of the Federal Reserv..

  What is the aftertax salvage value of the equipment

Kolby’s Korndogs is looking at a new sausage system with an installed cost of $910,000. This cost will be depreciated straight-line to zero over the project’s seven-year life, at the end of which the sausage system can be scrapped for $105,000. What ..

  What is annualized holding period return

Jack purchased 100 shares of Green Forest Inc. stock at a price of $157.65 three months ago. He sold all stocks today for $158.57. During this period the stock paid dividends of $5.67 per share. What is Jack's annualized holding period return (annual..

  Identified an investment project with the cash flows

Huggins Co. has identified an investment project with the following cash flows. If the discount rate is 10 percent, what is the present value of these cash flows? What is the present value at 18 percent? At 24 percent?

  Explain what a residual dividend policy implies

One position expressed in the financial literature is that firms set their dividends as a residual after using income to support new investment. Explain what a residual dividend policy implies, illustrating your answer with a table showing how differ..

  Standard deviation of the portfolio return

You have a 2-stock portfolio with a total value of $510,000. $195,000 is invested in Stock A and the remainder is invested in Stock B. If standard deviation of Stock A is 19.90%, Stock B is 9.35%, and correlation between Stock A and Stock B is –0.60,..

  Would a collar or reverse collar serve as a better hedge

Your bank is asset sensitive, and management wants to protect against loss from interest rate changes. a. Would an interest rate cap or floor serve as a better hedge? Explain. b. Would a collar or reverse collar serve as a better hedge? Explain. c. W..

  Sales to justify introduction of the new credit policy

Dickson City Company has annual sales of $5 million, while the cost of goods sold is $3.2 million. All sales are made on a cash basis. The owner of Dickson has come up with the plan of giving credit to the customers. The manager of the firm doubts wh..

  Interest is compounded continuously

How long will it take for $1400 to grow to $39,800 at an interest rate of 10.2% if the interest is compounded continuously? Round the number of years to the nearest hundredth.

  Consider expanding into various foreign countrires

Recently, JCPenny decided to consider expanding into various foreign countrires; it applied a comprehensive country risk analysis before making its expansion decisions. Identify the political factors that you think may possibly affect the performacne..

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