Question: a loan contract called for a payment after two years of $1500 plus interest (on $1500 only) at 8% compounded quarterly, and second payment after

a loan contract called for a payment after two years of $1500 plus interest (on $1500 only) at 8% compounded quarterly, and second payment after four year of $2500 plus interest (on this $2500)at 8% compounded quarterly. what would you pay to purchase the contract 18 months after the contract date if you required a return of 10.5% compounded semiannually

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

A loan contract called for a payment after two years of $1500 plus interest (on this $1500 only) at 8% compounded quarterly, and a second payment after four years of $2500 plus interest (on this...

A loan contract called for a payment after two years of $1500 PLUS INTEREST at 8% compounded quarterly, and a second payment after four years of $2400 PLUS INTEREST at 8% compounded quarterly. What...

A loan contract called for a payment after two years of $1500 plus interest (on this $1500 only) at 8% compounded quarterly, and a second payment after four years of $2500 plus interest (on this...

Need help with 1,2,3,4,5,6,7,9 and 10. need help with problem 2, 5, 6, 7, 9 and 10 2.3 Problems 1. You take out a loan to purchase a truck. The amount of the loan is $12,000, with the understanding...

nedd help with 1 and 2 2.3 Problems 1. You take out a loan to purchase a truck. The amount of the loan is $12,000, with the understanding that you will repay over 30 months at an interest rate of...

20. An investment pays you an annual stated rate (nominal rate) of 9 percent interest, compounded annually. A second investment of equal risk pays interest.compounded quarterly. What nominal annual...

Four years ago Aminata borrowed $5,000 from Randal with interest at 8% compounded quarterly to be repaid one year from today. Two years ago Aminata borrowed another $2,500 from Randal at 6%...

stion 1 (4 points) Listen You would like to have $70,000 to make the down payment on your home in 5 years from now. Calculate the amount you would need to deposit in an account today in order to have...

Answer the following questions by including the appropriate cash flow diagrams, solutions and final answer 1. At what effective interest rate will 8% compounded quarterly be comparable to? 2. How...

Chapter 9 - Capital Assets q1: At the date of acquisition, depreciable base, also called amortizable amount, equals a. asset cost minus estimated residual value b. asset cost plus salvage value c....

Morgan Contractors borrowed $1.75 million at an APR of 10.2 percent. The loan called for a compensating balance of 12 percent. What is the effective interest rate on the loan?

Zeal Corporation has 50-year bond pays an annual coupon. The bond has a yield to maturity of 8 percent. The bond currently trades at a premium--its price is above the par value of $1,000. Which of...

Corporate bonds a . have priority over holders of common stock as to payment of dividends. b . represent the true ownership of a corporation. c . provide a proportionate interest in a corporation...

https://media.cheggcdn.com/media/e59/e5900ba1-02b0-44ab-8246-fb980e24e7c1/phpDkQ6Ux

6. Suppose that a Swiss watchmaker imports watch components from Sweden and exports watches to the United States. Also suppose the dollar depreciates, and the Swedish krona appreciates, relative to...

3. The exchange rate between the U.S. dollar and the British pound starts at $1 = 0.5. It then changes to $1 = 0.75. Given this change, we would say that the U.S. dollar has while the British pound...

8. Explain why you agree or disagree with the following statements. Assume other things equal. LO27.3 a. A country that grows faster than its major trading partners can expect the international value...