Question 6:
Option d is correct
First Cash amount = $ 2000
Growth Rate = 3%
Discount Rate = %
Value of perpetuity 10 years from now = ($2000)/(0.05-0.03)
= $ 100,000
Present Value of Perpetuity = $ 100,000 * Growth Rate Discounting factor for 10 years
= $ 100,000 * 0.74409
= $ 74,409
Question 7:
EMI for Mortgage Loan is $ 1909.66
where
How many payments to be made to ensure $300000 equity in home is 303 installment ( in 26th year)
Repayment schedule in 26th year
year 25 end | ||||
301 | $103,692.82 | $345.64 | $1,564.02 | $102,128.81 |
302 | $102,128.81 | $340.43 | $1,569.23 | $100,559.57 |
303 | $100,559.57 | $335.20 | $1,574.46 | $98,985.11 |
304 | $98,985.11 | $329.95 | $1,579.71 | $97,405.40 |
305 | $97,405.40 | $324.68 | $1,584.98 | $95,820.42 |
306 | $95,820.42 | $319.40 | $1,590.26 | $94,230.16 |
307 | $94,230.16 | $314.10 | $1,595.56 | $92,634.60 |
308 | $92,634.60 | $308.78 | $1,600.88 | $91,033.72 |
309 | $91,033.72 | $303.45 | $1,606.21 | $89,427.51 |
310 | $89,427.51 | $298.09 | $1,611.57 | $87,815.94 |
311 | $87,815.94 | $292.72 | $1,616.94 | $86,199.00 |
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