+ve number is assumed to be an inflow and -ve number is assumed to be an outflow
Since you are receiving $1000 as on today it will be considered as an inflow in your hands and an outflow from the hands of the bank.
Now after 1 year when you return the money with interest i.e.$1050 it will be considered as an outflow from your hands and an inflow in the hands of the bank.
Thus the correct answer to the first question is option D
The correct answer to the second question is the option C
You plan to borrow $1,000 from a bank. In exchange for $1,000 today, you promise to...
You plan to borrow $2.000 from a bank In exchange for $2.000 today you promise to pay $2,180 in one year What does the cash fow Simeline look ke from your penpective? What does itlook e ton the bank's penpedive? What does the cash flow timeline look like from your perspective? (Select the best choice below) OA. -$2.180 $2 000 O B. $2.000 $2.180 $2.000 -$2.180 OD. 32.10 $2.000 What does it look lke from the bank's perspective? (Select the...
You currently have a one-year-old loan outstanding on your car. You make monthly payments of $500. You have just made a payment. The loan has four years to go (i.e., it had an orig of five years). Show the timeline from your perspective. How would the timeline differ if you created it from the bank's perspective? Show the timeline from your perspective. (Select the best choice below.) O A. Month 0 1 2 3 4 48 Cash Flow $500 $500...
A bank agrees to lend you $1,000 today in return for your promise to pay back $2,773 nine years from today. What rate of interest is the bank charging you?
Question 4 20 pts A company approaches a bank and wants to deposit $7m from the bank starting in 175 days for 90 days. The bank sees the current market information as • 175 day continuously compounded rate is 3.8671%. • There is a Eurodollar futures contract expiring in 175 days with a price of 96.3491. The bank sets their deposit rate at 0.3% below fair. At what rate does the bank set its rate? % (solve to 4 decimal...
You borrow $1,000 from the bank and agree to repay the loan over
the next year in 12 equal monthly payments of $90. However, the
bank also charges you a loan initiation fee of $29, which is taken
out of the initial proceeds of the loan. What is the effective
annual interest rate on the loan, taking account of the impact of
the initiation fee?
You borrow $1,000 from the bank and agree to repay the loan over the next...
You borrow $1,000 from the bank and agree to repay the loan over the next year in 12 equal monthly payments of $90. However, the bank also charges you a loan initiation fee of $28, which is taken out of the initial proceeds of the loan. What is the effective annual interest rate on the loan, taking account of the impact of the initiation fee? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal...
Boyd Company has a line of credit with State Bank. Boyd can borrow up to $200,000 at any time over the course of the 2018 calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during 2018. Boyd agreed to pay interest at an annual rate equal to 3 percent above the bank's prime rate. Funds are borrowed or repaid on the first day of each month. Interest is...
You are considering opening a new plant. The plant will cost $95.5 million upfront and will take one year to build. After that, it is expected to produce profits of $29.1 million at the end of every year of production. The cash flows are expected to last forever. Calculate the NPV of this investment opportunity if your cost of capital is 6.5%. Should you make the investment? Calculate the IRR. Does the IRR rule agree with the NPV rule? Here...
You run a construction firm. You have just won a contract to build a government office complex, Building will require an investment of $10.4 million today and $4.5 million in one year government will pay you $20.3 million in one year upon the building's completion. Suppose the interest rate is 10.1% 2. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV...
To fund your dream around-the-world vacation, you plan to save $1,250 per year for the next 12 years starting one year from now. If you can earn an interest rate of 5.71 percent, how much will you have saved for your vacation? Multiple Choice o $18,431.38 o $20,018.86 o $19,832.35 o О $20,73382 $20,733.82 o $19,582.60 The value of the following cash flows four years from today is $8,487.54. The interest rate is 5.6 percent. What is the value of...