Ned Shred, founder of Shred Mountain Bikes, has made his fortune and is looking for a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Ned Shred, founder of Shred Mountain Bikes, has made his fortune and is looking for a place to invest his wealth. Ned is considering investing in a mortgage by lending $250,000 to his sister Shelley. Ned will charge Shelley interest at 8.5% per annum, compounded semi-annually. The loan will have monthly payments based on a 20-year amortization and a 3-year term. Ned has discovered that he can deposit all of the payments he receives from the loan into an account that bears interest at a rate of 9% per annum, compounded monthly. 19. If Shelley makes all of her monthly payments on time, and Ned deposits all of all the payments into the account described above, what yield will Ned have earned on his investment at the end of the term of the loan? Express Ned's yield as a nominal rate per annum, compounded monthly. (1) 9.00% (2) 8.25% (3) 8.76% (4) 8.44% Ned Shred, founder of Shred Mountain Bikes, has made his fortune and is looking for a place to invest his wealth. Ned is considering investing in a mortgage by lending $250,000 to his sister Shelley. Ned will charge Shelley interest at 8.5% per annum, compounded semi-annually. The loan will have monthly payments based on a 20-year amortization and a 3-year term. Ned has discovered that he can deposit all of the payments he receives from the loan into an account that bears interest at a rate of 9% per annum, compounded monthly. 19. If Shelley makes all of her monthly payments on time, and Ned deposits all of all the payments into the account described above, what yield will Ned have earned on his investment at the end of the term of the loan? Express Ned's yield as a nominal rate per annum, compounded monthly. (1) 9.00% (2) 8.25% (3) 8.76% (4) 8.44%
Expert Answer:
Answer rating: 100% (QA)
3 876 Neds investment will earn him a nominal rate of 876 per annum compounded m... View the full answer
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
Posted Date:
Students also viewed these finance questions
-
Journalize the transactions For a compound transaction if an amount box does not require an entry leave it blank For December 13th transactions a record the payroll and b payment of salaries For...
-
For a certain small town, the table shows the demand schedule for water. Assume the marginal cost of supplying water is constant at $4 per bottle. Price 2843545 1.800 2.200 3.600 4.400 $9 $8 $7 $6 $5...
-
Journalize the transactions for Ing Corporation given in BE3-3. BE3-3 June 1 Issued common shares to shareholders in exchange for $2,500 cash. 2 Purchased supplies on account for $250. 12 Billed J....
-
When average total cost is at its minimum: A. Average variable cost is declining with increases in output B. Average variable cost plus average fixed cost is declining with increases in output C....
-
In Exercises 24,26, and 28, we've tested a hypothesis about whether the use of statistics in NEJM medical articles has changed over time. The table shows the test's residuals. a) Show how the...
-
If a tax preparer notes an error on a clients tax return, under Circular 230, the tax preparer should: a. Report the mistake to the IRS immediately b. Prepare an amended tax return and file such...
-
Use the data in Exercise 23 in Section 13.1 for the following. a. Compute a point estimate for the mean noise level for streets with a mean speed of 35 kilometers per hour. b. Construct a 99%...
-
During December 2010, Amin Corp. manufactured products requiring 8,000 standard labor hours. The following variance and actual information is available: Labor rate variance ........ $4,500 U Labor...
-
What are significant forces that have shaped operations management in business?
-
Note 3 describes Cisco's 2013 acquisition of NDS Group Limited (NDS") for cash totaling $5,005 million and reports the allocation of the purchase price to specific asset and liability accounts. i....
-
A 9-volt battery is attached in series to a 200 Ohm resistor. A) Calculate the current flowing through the circuit. B) if a second 200 Ohm resistor is added to the circuit, will the current INCREASE...
-
How many degrees of freedom are there in a three-element model of beam fixed at one end and attached to a linear spring at its other end?
-
The free response of a system with a cubic nonlinearity occurs only at the linear natural frequency of the system. Indicate whether the statement presented is true or false. If true, state why. If...
-
Explain the use of the detuning parameter.
-
How many degrees of freedom are there in a two-element model of a fixed-fixed shaft with a rotor at its midspan?
-
What are the dimensions of the following quantities? (a) Coefficient multiplying \(x^{3}\) in nonlinear spring stiffness, \(k_{3}\) (b) The perturbation parameter, \(\varepsilon\) (c) A detuning...
-
Considering effective communication techniques how would you respond to Mrs . Green.
-
The following cost information was provided to you for analysis: September 12,000 Units Produced Costs: TIC TAC TOE TING August 10,000 P80,000 70.000 60.000 50,000 How much is the fixed cost per...
-
Laurel says, "I understand that operating activities are affected by changes in current asset and current liability accounts. I also know that short-term loans payable are current liabilities. What I...
-
Reactor Corp. has incurred utility costs for the month of December, but the utility company does not send out its bills until the 15th of the following month. Reactor does not plan on recording the...
-
Cling-on Ltd. sells rock-climbing products and also operates an indoor climbing facility for climbing enthusiasts. On September 1, 2015, the company had a balance of $12,000 in its Bank Loan Payable...
-
The peak amplitude of a single-degree-of-freedom system, under a harmonic excitation, is observed to be \(5 \mathrm{~mm}\). If the undamped natural frequency of the system is \(5 \mathrm{~Hz}\), and...
-
A torsional system consists of a disc of mass moment of inertia \(J_{0}=10 \mathrm{~kg}-\mathrm{m}^{2}\), a torsional damper of damping constant \(c_{t}=300 \mathrm{~N}-\mathrm{m}-\mathrm{s} /...
-
The landing gear of an airplane can be idealized as the spring-mass-damper system shown in Fig. 3.52 [3.16]. If the runway surface is described \(y(t)=y_{0} \cos \omega t\), determine the values of...
Study smarter with the SolutionInn App