Annual payments starting one year after the loan is made

Assignment Help Financial Management

Reference no: EM13731909

You borrow $5,000 at 10% per year and will pay off the loan in 3 equal annual payments starting one year after the loan is made. The end-of-year payments are $2010.57. Which of the following is true for your payment at the end of year 2?

a. Interest is $500 and the principal is $1510.57

b. Interest is $450 and the principal is $1560.57

c. Interest is $348.94 and the principal is $1661.63

d. Interest is $182.78 and the principal is $1827.79

Reference no: EM13731909

Questions Cloud

Process of bidding construction contracts : Dixie Construction is a young firm that is in the process of bidding (and winning) construction contracts. While they are unable to pay any dividends today, once the contracts are awarded and their work begins in earnest, they expect to be able to st..

Charges customers for their wind generated electricity : Viento Windmills is a utility that charges customers for their wind generated electricity. With their current technology, they earn a total of $65 million each year to pay out to their 3 million shareholders.

Using the shortest life planning horizon : When using the shortest life planning horizon (non LCM approach), what issue should you explicitly consider for alternatives whose cash flow profiles extend longer than the shortest life determination of salvage values for truncated cash flows the va..

What is the present equivalent cost of the investment : A machine at a bottling plant that has a first cost of $150,000, operating and maintenance costs of $17,500 per year, and an estimated net salvage value of $25,000 at the end of thirty years. Assume an interest rate of 8%. What is the present equiv..

Annual payments starting one year after the loan is made : You borrow $5,000 at 10% per year and will pay off the loan in 3 equal annual payments starting one year after the loan is made. The end-of-year payments are $2010.57. Which of the following is true for your payment at the end of year 2?

Determine the yield to investor : 3 Today, the one-year U.S. interest rate is 2%, while the one-year interest rate in Mexico is 6%. The spot rate of the Mexico peso (MXP) is $.08 the one-year forward rate of the MXP exhibits a 11% discount. Determine the yield (percentage return on i..

Nominal interest rate : If one-year nominal interest rate in the U.S. is 3%, while the one-year nominal interest rate in Australia is 5%. The spot rate of the Australian dollar is $.96. Interest Parity is held. You will need 5 million Australian dollars in one year. Today, ..

What the net inflow or outflow is as measured : Bronco Co. is a U.S.-based MNC that has subsidiaries in Spain and Germany. Both subsidiaries frequently remit their earnings back to the parent company. The Spain subsidiary generated a net outflow of €1,000,000 this year, while the German subsidiary..

What is the new exchange rate for the yen : The inflation rate in the U.S. is 3%, while the inflation rate in Japan is 2%. The current exchange rate is $1 equal to 101 Japanese yen. If purchasing power parity condition is existed, what is the new exchange rate for the yen?

User Account

All Pages