How to make a single lump-sum payment of principal

Assignment Help Econometrics
Reference no: EM13186402

Suppose a firm is considering taking out a loan for $10,000. The length of the loan is 5 years and the loan interest rate is 15% annual compound interest. The firm's real MARR is 8% and the inflation rate is 4%. The firm is considering two options:

1) pay the accumulated interest at the end of each year and repay all of the principal at the end of the fifth year and

2) make a single lump-sum payment of principal and interest at the end of 5 years. Recommend the best of these two options based on a then-current present worth analysis.

Reference no: EM13186402

Questions Cloud

Compute the equivalent mass of p2o5 : sample of fertilizer by the procedure of this experiment and obtain 1.000g of MgNH4PO4 * 6H20. Calculate the equivalent mass of P2O5 initially in the sample.
Find the periodic payment required to amortize a loan : Find the periodic payment required to amortize a loan of $227,000 over 360 months with interest charged at the rate of 8(1/8)%/year compounded monthly.
Find the forecast of demand in period 4 using exponential : The actual demand of a product in period 1 through 3 are 285, 229, 309 units, respectively. Find the forecast of demand in period 4 using the exponential smoothing model with a smoothing constant of 0.41. The forecast demand for period 1 was 302 u..
State what is the solubility degrees celcius : carbon dioxide has a solubility of 0.0342 M in water. What is the solubility at 25 degrees celcius and 2110 Torr?
How to make a single lump-sum payment of principal : Suppose a firm is considering taking out a loan for $10,000. The length of the loan is 5 years and the loan interest rate is 15% annual compound interest. The firm's real MARR is 8% and the inflation rate is 4%. The firm is considering two options..
State what is the final temperature of the water : the molar heat capacities of iron and gold are 25.19J/(mol*degrees celsius) and 25.41 J/(mol*degrees celsius), respectively. what is the final temperature of the water and pieces of metal?
State how much work is done on the system : How much work would have been done if the gas were ideal? Account for the differences the two values.
Memory management activities performed by os : What are the advantages and disadvantages of having a small number of sectors per disk cluster and describe the process management and memory management activities performed by the Operating System.
State how many kj are required to boil the water : heat from a mountain climber's stove at an elevation where the boiling point of water is 89 degrees celsius, how many kJ are required to boil the water?

Reviews

Write a Review

Econometrics Questions & Answers

  What is the efficient scale and minimum average cost

What is the cost function, marginal cost function, and average cost function for each plant? b) What is the efficient scale and minimum average cost for each plant? c) What is the cost function for the firm?

  Find the inverse demands faced by the two firms

where a > 1. In addition assume that the firms target own profit maximization, compete (simultaneously) in quantities and have marginal costs equal to c1 = c2 = c. Assume that 1 > c > or equal to 0. Describing the necessary mathematical steps, an..

  Regression for predicting a future value

We have three variables, Information is 2000-2005. I use OLS to Determine the model and get a standard result.

  Compute output per firm and profit per firm at this price

suppose that there are 70 firms in operating in the industry. using the MC curve, find out how much output in total is delivered to the market at each price (you only need to consider prices equal to the MC values above). now assume that the marke..

  How to use the pw method and marr

A new truck can be purchase for $84,000. Its expected useful life is six years, at wich time market value will be zero. Annual receipts less expenses will approximatetely $18,000 per year over the six-year study period. Use the PW method and MARR ..

  Calculate the regression coefficients

Calculate the standard error of estimate and the standard error of Coefficient Standard error of estimate = Standard error of Coefficient = 4. Make a prediction of Y when X = 64. Prediction y= 5. Calculate a 95% prediction interval when X = 64. Pre..

  What is the cost per mile to own and operate the vehicle

Annual maintenance of the vehicle is estimated to cost $700 per year. The cost of recharging the batteries is estimates at $0.015 per mile. The salvage value of the batteries and the vehicle at the end of 12 years is estimated at $2000. Consider t..

  What is the long-run average cost

A firm has a production function Q=F(K,L) with the constant return to scale, where k is units of capital and L is unites of labour.Imput prices are r=$2 per unit of K and w=$1 per unit of L.When it produces 5 units of output,it uses 2 units of cap..

  Find where demand and supply curves intersect

1. The three fundamental economic questions of what, how, and for whom: a-exist because of scarcity. b-are much more serious in a socialist system. c-are not serious in a capitalistic system. d-are not relevant in the industrialized world of today.

  What is the optimal schooling level

It can be shown that the marginal return to schooling investments is MW(s) = k0 = ps. What condition governs the optimal choice of education, s*? If r= 5% and ifk 0 = 5.25, what is the optimal schooling level? Suppose that the wage-schooling sc..

  Which is the alternate hypothesis

The mean gross annual incomes of certified welders are normally distributed with the mean of $23,577 and a standard deviation of $2,358. The ship building association wishes to find out whether their welders earn more or less than $23,577 annually..

  What is the predicted price of an ocean view unit

A researcher has developed the following regression equation to predict the prices of luxurious Oceanside condominium units, Picture , where Price = the price of a unit (in $thousands), Size = the square footage (in square feet), View = a dummy varia..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd