Amortizing a loan, Corporate Finance

Suppose you take out a loan of $10,000, repayable by five equal annual instalments. The interest rate is 10% per year.

(a) How much do you need to repay per year to the nearest cent if payments are due : (i) at the beginning of each year (ii) at the end of each year?

(b) Which loan in part (a) is preferable, (i) or (ii)? Explain your answer.
Posted Date: 3/25/2013 2:13:42 AM | Location : Australia







Related Discussions:- Amortizing a loan, Assignment Help, Ask Question on Amortizing a loan, Get Answer, Expert's Help, Amortizing a loan Discussions

Write discussion on Amortizing a loan
Your posts are moderated
Related Questions
X has 10 shareholders, each of whom owns 100 of its 1,000 outstanding shares of common stock (worth $100 per share).  No other stock is outstanding.  Determine whether the securiti

Market-Adjusted and Two-Factor Models - Event Study As mentioned previously, you can use several alternative models to calculate a security's expected return. The market-adjus

Question: (a) You are given the following information on two risky assets A and B. E(X) = 25% E(Y) = 30% Var (X) = 16% Var (Y) = 49% The correlation matr

1. Describe three different types of Mergers, and in what circumstances you expect to see each type occurring. 2. Just as Acquisitions and Mergers are a means by which compan

Pfizer Incorporated has 2 million shares of common stock, selling at $18 each. The β of the stock is 1.5, T-bill rate is 6%, and the expected return on the market is 12%. Pfizer al

Question 1: (a) Describe the following stock market anomalies which have been documented in the finance literature: (i) the January effect (ii) the Size effect (iii) t


Do mergers result in layoffs? A: Overall employment in the banking industry actually has increased slightly over the last ten years. Some mergers do result in layoffs. However,

Mad Cat Inc. is debating between two alternative earth moving machines to use for the next 8 years.  The first supplier, Double Candle, offers the necessary machinery (CCA rate = 3

Question: "The separation of ownership and control of a corporate firm has given rise to what is called ‘a positive and normative divide' in explaining managerial behaviour. F