Question 4 a. Masako wants to save money to meet two (2) objectives: ACCT23 b. i....
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Question 4 a. Masako wants to save money to meet two (2) objectives: ACCT23 b. i. She would like to be able to retire twenty five (25) years from now and have a pension for fifteen (15) years after that. Each payment on the pension would be $30,000. ii. She would like to purchase a $25 000 car ten (10) years from now. The cost of capital is 6% per annum. Assuming she deposits the same amount S at the end of each year for twenty five (25) years, with the first deposit of annual savings being one (1) year from now, what is the amount S such that she will exactly be able to meet her objectives? (13 marks Chris borrows $1 million on a 10-year loan from a bank to finance the expansion of his business. The stated annual interest rate is 15%. but the bank plans to compute interest every quarter. i. Estimate your quarterly payments on this loan. (4 marks ii. Estimate the effective annual interest rate on this loan. (4 mark- iii. How would your answer to (ii) change if interest were computed monthly? (4 mark- (Total 25 mark Question 4 a. Masako wants to save money to meet two (2) objectives: ACCT23 b. i. She would like to be able to retire twenty five (25) years from now and have a pension for fifteen (15) years after that. Each payment on the pension would be $30,000. ii. She would like to purchase a $25 000 car ten (10) years from now. The cost of capital is 6% per annum. Assuming she deposits the same amount S at the end of each year for twenty five (25) years, with the first deposit of annual savings being one (1) year from now, what is the amount S such that she will exactly be able to meet her objectives? (13 marks Chris borrows $1 million on a 10-year loan from a bank to finance the expansion of his business. The stated annual interest rate is 15%. but the bank plans to compute interest every quarter. i. Estimate your quarterly payments on this loan. (4 marks ii. Estimate the effective annual interest rate on this loan. (4 mark- iii. How would your answer to (ii) change if interest were computed monthly? (4 mark- (Total 25 mark
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a To calculate the amount S that Masako needs to deposit annually for 25 years to meet her objectives we can break down the two objectives separately ... View the full answer
Related Book For
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th Edition
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
Posted Date:
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