Present-value comparison? and loan amortization

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Reference no: EM131817126

1. (?Present-value comparison?) You are offered ?$1,800 today, $9,000 in 9 years, or $34,000 in 28 years. Assuming that you can earn 12 percent on your? money, which offer should you? choose?

a. What is the present value of $34,000 in 28 years discounted at 12 percent interest? rate? $? (Round to the nearest? cent.) ANSWER:

b. What is the present value of $9,000 in 9 years discounted at 12 percent interest? rate? $(Round to the nearest? cent.) ANSWER:

c. Which offer should you? choose? ? (Select the best choice? below.) ANSWER:

A. Choose $34,000 in 28 years because its present value is the highest.

B. Choose $9,000 in 9 years because its present value is the highest.

C. Choose $1,800 today because its present value is the highest.

2. (Loan amortization?) On December? 31, Son-Nan Chen borrowed $95,000?, agreeing to repay this sum in 18 equal? end-of-year installments and 13 percent interest on the declining balance. How large must the annual payments? be? The amount of the annual payments must be $.?(Round to the nearest? cent.)

Reference no: EM131817126

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