You are considering buying a loan from a local bank with the following features: Loan principal: $10,000

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You are considering buying a loan from a local bank with the following features:

Loan principal: $10,000

Term: 10 years

Stated rate: 5% (paid annually)

Current market value: 9,500

What rate of return can you expect from this investment?

What is the NPV of the project with the following cash flows?

Year 0: -$500

Year 1: $200

Year 2: $400

Year 3: $300

The WACC for the project is 10%.

Suppose you can save $910.42 annually, and you need to have $12,000 in 10 years. What rate of interest would you have to earn to reach your goal?

Related Book For answer-question

Income Tax Fundamentals 2013

ISBN: 9781285586618

31st Edition

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

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Posted Date: Oct 02, 2023 03:16 AM

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You are considering buying a loan from a local bank with the following features: Loan principal: $10,000

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The detailed answer for the above question is provided below Lets address each of your questions one by one Rate of Return on the Loan To calculate th... View the full answer

Income Tax Fundamentals 2013

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