Question: Your friend borrowed $ 1 , 0 0 0 from you, with the promise to pay you back a total of $ 1 , 2

Your friend borrowed $1,000from you, with the promise to pay you back a total of $1,200in five years. And until then, he will give you $50per year as additional interest payments.
a)What is your expected realized rate of return on this loan, assuming you always immediately spend the annual interest payments ?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

All results must be numeric and rounded to the nearest hundredth When you round off to the hundredth digit, you look at only the thousandth digit i.e. you focus only on the next digit. Say x =...

Q:

Module 2 Review Name Round all answers to the nearest cent unless otherwise noted. Do not round until the end of the problem. SHOW ALL WORKI 2.1-2.3 1. Suppose that the local sales-tax rate is 6% and...

Q:

Express the given fraction as a percent. five sixths Express the given decimal as a percent. 0.0862 An exercise machine with an original price of $790 is on sale at 22% off. a. What is the discount...

Q:

An investment will pay $50 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 11%...

Q:

1. Express the given fraction as a percent. 3/8 (Round to the nearest hundredth as needed.) 2. Express the given decimal as a percent. 0.9202 3. An exercise machine with an original price of $850 is...

Q:

student number is 447 After reviewing your notes from the Financial Accounting course, which you both took (and loved), you decided that the best way to form a business would be to set up a...

Q:

Suppose you deposited $250 al the end of 2011,2012, 2013 and 2014. How much would you have in your account on 1 January 2015, bused armal compounding of 8% by your bank? A. $1025.25 B. $1235.53 C....

Q:

4-15 Find the interest rate (or rates of return) in each of the following situations. a. You borrow $700 and promise to pay back $749 at the end of 1 year. b. You lend $700 and receive a promise to...

Q:

Answer the following simple interest questions: 1. Jeff borrowed $25 from his dad to buy a fishing license and promised to pay his dad back in one month. His dad agreed, but said that Jeff must pay...

Q:

Answer the following simple interest questions: 1. Jeff borrowed $25 from his dad to buy a fishing license and promised to pay his dad back in one month. His dad agreed, but said that Jeff must pay...

Q:

1. What would hold back an employer from using HRM technology that was likely to improve performance? Which of these obstacles, if any, are reasonable barriers to using HRM technology, and which...

Q:

Please read the article posted on Airbnb, "How Airbnb took over the world" and answer the following questions: 1. Have you ever stayed at an Airbnb? If so, how was your experience? If not, would you...

Q:

All of the following are true about the Social Security System EXCEPT A . Meant to supplement other retirement income, it provides a minimum floor of income. B . Benefits are prescribed by law, not...

Q:

The following is the adjusted trial balance of Sierra Company. (Click on the Graded Worksheet Tab below.) Sierra Company Adjusted Trial Balance December 31 Account Title Debit Credit Cash $15,000...