Cory and Cassandra's mother/mother-in-law, Margaret, issued a $1 000 000 twenty-five year interest-only loan to the couple.
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Cory and Cassandra's mother/mother-in-law, Margaret, issued a $1 000 000 twenty-five year interest-only loan to the couple. Under the terms of the loan, they make annual payments of interest every year (at 3% p.a.); the final payment will consist of the regular interest amount together with the return of principal. Unbeknownst to the couple, Margaret has invested each interest payment at 3.5% p.a. Her intention is to give the accumulated amount to the couple when the loan matures. Allowing for this gift, what is Cory and Cassandra's net payment to Margaret when the loan matures?
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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