Question: You are negotiating to make a 10-year loan of $35,000 to ABC Company. According agreement ABC Company will pay the loan in the following manner
You are negotiating to make a 10-year loan of $35,000 to "ABC Company. According agreement ABC Company will pay the loan in the following manner 1 $2,500 at the end of Year 1 2. $5,000 at the end of Year 2, 3. $7,500 at the end of Year 3, 4. $10,000 at the end of Year 4, and 5. a fixed but currently unspecified cash flow at the end of each year from Year 4 through Year 10. "ABC" Company is essentially a low risk company, so you are confident the payments will be made. Accordingly, you regard an 8% as an appropriate rate of return on a low risk but illiquid 10-year loan. ALL the questions that are presented on the You are negotiating to make a 10-year loan of $35,000 to "ABC Company. According agreement ABC Company will pay the loan in the following manner 1 $2,500 at the end of Year 1 2. $5,000 at the end of Year 2, 3. $7,500 at the end of Year 3, 4. $10,000 at the end of Year 4, and 5. a fixed but currently unspecified cash flow at the end of each year from Year 4 through Year 10. "ABC" Company is essentially a low risk company, so you are confident the payments will be made. Accordingly, you regard an 8% as an appropriate rate of return on a low risk but illiquid 10-year loan. ALL the questions that are presented on the
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