Suppose that a mortgage of $200,000 is to be repaid over 20 years at an annual...

 

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Suppose that a mortgage of $200,000 is to be repaid over 20 years at an annual interest rate of 5%. Using the formula for calculating the present value of an annuity of n periods, find the fixed yearly payment to pay off the loan in 20 years. Question 2 You have just won $20 million in a provincial lottery, which promises to pay you $1 million (tax-free) every year for the next 20 years. Have you really won $20 million? Question 3 Suppose a Government of Canada zero-coupon bond can be purchased for $3816.31 at the end of 2005. At maturity, in seven years, the investor receives $6987.50. What is the yield to maturity on this zero-coupon bond? Suppose that a mortgage of $200,000 is to be repaid over 20 years at an annual interest rate of 5%. Using the formula for calculating the present value of an annuity of n periods, find the fixed yearly payment to pay off the loan in 20 years. Question 2 You have just won $20 million in a provincial lottery, which promises to pay you $1 million (tax-free) every year for the next 20 years. Have you really won $20 million? Question 3 Suppose a Government of Canada zero-coupon bond can be purchased for $3816.31 at the end of 2005. At maturity, in seven years, the investor receives $6987.50. What is the yield to maturity on this zero-coupon bond?

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Question 1 To find the fixed yearly payment to pay off the mortgage loan of 200000 over 20 years at ... View the full answer