A loan is to be repaid by a series of instalments payable annually in arrcar for...
Fantastic news! We've Found the answer you've been seeking!
Question:
![A loan is to be repaid by a series of instalments payable annually in arrcar for 15 years. The first](https://dsd5zvtm8ll6.cloudfront.net/si.experts.images/questions/2023/04/643648f882718_1681279204943.jpg)
Transcribed Image Text:
A loan is to be repaid by a series of instalments payable annually in arrcar for 15 years. The first instalment is £1,200 and payments increase thereafter by £250 per annum. Repayments are calculated using a rate of interest of 6% per annum effective. Determine: (1) (iii) the capital and interest components of the final instalment. the amount of the loan. the capital outstanding immediately after the 9th instalment has been made. [2] [2] [Total 7] (1) e The force of interest, 8(), is a function of time and at any time t, measured in years, is given by the formula: (0.06 8(r) 0.10-0.01 0≤1≤4 4<1≤7. 0.011-0.04 7<1 [3] Calculate, showing all working, the value at time != 5 of £10,000 due for payment at time - 10. [5] Calculate the constant rate of discount per annum convertible monthly which leads to the same result as in part (1) [2] [Total 7] A one-year forward contract on a share was agreed on 1 September 2015 when the share price was £8.70 and the risk-free force of interest was 7% per annum. The stock was expected to pay a dividend of £1.10 eight months after the date of issue. The price of the share was £9.90 on 1 February 2016 and the risk-free force of interest was 6.5% per annum. The dividend expectation was unchanged. Calculate, showing all working, the value of the contract to the holder of the long forward position on 1 February 2016. [7] A loan is to be repaid by a series of instalments payable annually in arrcar for 15 years. The first instalment is £1,200 and payments increase thereafter by £250 per annum. Repayments are calculated using a rate of interest of 6% per annum effective. Determine: (1) (iii) the capital and interest components of the final instalment. the amount of the loan. the capital outstanding immediately after the 9th instalment has been made. [2] [2] [Total 7] (1) e The force of interest, 8(), is a function of time and at any time t, measured in years, is given by the formula: (0.06 8(r) 0.10-0.01 0≤1≤4 4<1≤7. 0.011-0.04 7<1 [3] Calculate, showing all working, the value at time != 5 of £10,000 due for payment at time - 10. [5] Calculate the constant rate of discount per annum convertible monthly which leads to the same result as in part (1) [2] [Total 7] A one-year forward contract on a share was agreed on 1 September 2015 when the share price was £8.70 and the risk-free force of interest was 7% per annum. The stock was expected to pay a dividend of £1.10 eight months after the date of issue. The price of the share was £9.90 on 1 February 2016 and the risk-free force of interest was 6.5% per annum. The dividend expectation was unchanged. Calculate, showing all working, the value of the contract to the holder of the long forward position on 1 February 2016. [7]
Expert Answer:
Answer rating: 100% (QA)
The image you provided includes a series of questions related to finance specifically involving loan repayment force of interest as a function of time and the valuation of a forward contract on a shar... View the full answer
Related Book For
Engineering Economic Analysis
ISBN: 9780195168075
9th Edition
Authors: Donald Newnan, Ted Eschanbach, Jerome Lavelle
Posted Date:
Students also viewed these accounting questions
-
Prepare the journal entry to record the sale of the equipment. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select...
-
When discussing this property with potential tenants, What are three (3) points that you will ensure you raise with them before they submit an application?
-
Portfolio i's return is described by: ri = rf+Bi,m (rm -rf)+Bi,c(rc-rf) +0.5%, where rm is the return on the market index, rc is the return on the commodity index and rf is the risk- free rate. (a)....
-
On December 31, 2019, Metlock Inc. borrowed $3,300,000 at 13% payable annually to finance the construction of a new building. In 2020, the company made the following expenditures related to this...
-
(v) Do the algebra to simplify the expression in part (iv) to equation.
-
Use the GaussJordan elimination method to find all solutions of the system of linear equations. 4x + 5y = 3 3x + 6y = 1 2x-3y = 7
-
Pallos Company is purchasing the net assets of Shrilly Company. The book and fair values of Shrillys accounts are as follows: Accounts Book Fair Current assets . . . . . . . . . . . . . . . . . . . ....
-
Riding a Loop-the-Loop A car in an amusement park ride rolls without friction around the track shown in Fig. 7.32. It starts from rest at point A at a height h above the bottom of the loop. Treat the...
-
Below is the information relative to an exchange of assets by Bonita Industries. The exchange lacks commercial substance. Old Equipment Book Value Fair Value Cash Paid Case I $473000 $518000 $86500...
-
The information provided in this test allows you to set up the Cieneral, Payables and Receivables ledgers for an Ontario company named CHRIS'S WELDING owned and run by Chris George, amaster welder....
-
1) Calculate Norton equations in polar form. 2) Draw the equivalent circuit of Norton. 3) To make charge work with maximum power, what should be the values to connect circuit.(Use polar and complex...
-
Imagine trying to manage and accommodate the needs of more than 185,000 people at once. Imagine a variety of voices, languages, cultures, ethnic backgrounds, families, lifestyles, ages, and...
-
Question 1 Case Study Cross-Boundary Teaming for Innovation: Integrating Research on Teams and Knowledge in Organizations In a growing number of cases, teams span organisational boundaries, not just...
-
Article Assignment Select a business article from a professional news source's business section or professional journal. The article selected is not to be opinion driven. Provide a personal opinion...
-
Research can be conducted for a variety of reasons including searching for effective change strategies that allow followers to perceive of someone as a leader rather than a manager or studying a...
-
The revenue recognition principle and the expense recognition principle require that the company recognize related revenue and expense transactions in the same accounting period. Discuss why this...
-
Information for two alternative projects involving machinery investments follows. Project 1 requires an initial investment of $172,000. Project 2 requires an initial investment of $110,000. Annual...
-
Solve each equation or inequality. |6x8-4 = 0
-
A major industrialized state has a state corporate tax rate of 9.6% of taxable income. If a corporation has a state taxable income of $150,000, what is the total state and federal income tax it must...
-
Find the probability distribution and the expected PW to modify and assembly line. The first cost is $80000 and its salvage value is $0. The firm's interest rate is 9%. The savings shown in the table...
-
Each of the three alternatives shown has a 5-year useful life. If the MARR is 10%, which alternative should be selected? Solve the problem by benefit-cost ratio analysis. $600.0 $500.0 $200.0 Cost...
-
Describe the work involved in planning procurements for projects, including determining the proper type of contract to use and preparing a procurement management plan, statement of work, source...
-
Discuss how to conduct procurements and strategies for obtaining seller responses, selecting sellers, and awarding contracts? LO.1
-
Plot the six risks on a probability/impact matrix, using Figure 11-5 as a guide. Also assign a numeric value for the probability and impact of each risk on meeting the main project objective. Use a...
![Mobile App Logo](https://dsd5zvtm8ll6.cloudfront.net/includes/images/mobile/finalLogo.png)
Study smarter with the SolutionInn App