Assume capital markets are perfect

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Need help on the following question:

I. You are offered the opportunity to buy a note for $12,800.The note is certain to pay $2,000 at the end of each of the next 10 years.If you buy the note, what rate of interest will you receive? 1 Assume capital markets are perfect.

II. You need $25,000 ?ve years from now.

1. If you budget to make equal payments at the end of every year into an account that pays an annual interest rate of 7 percent, what are your annual payments?

2. Now assume you have up to $20,000 today to set aside in savings. How much of it must you put into the same account as a lump sum today to meet your goal?

Please provide step-to-step solutions on all calculations.

Need help on the following question:

I. You are offered the opportunity to buy a note for $12,800.The note is certain to pay $2,000 at the end of each of the next 10 years.If you buy the note, what rate of interest will you receive?1 Assume capital markets are perfect.

II. You need $25,000 ?ve years from now.

1. If you budget to make equal payments at the end of every year into an account that pays an annual interest rate of 7 percent, what are your annualpayments?

2. Now assume you have up to $20,000 today to set aside in savings. How much of it must you put into the same account as a lump sum today to meet your goal?

Please provide step-to-step solutions on all calculations.

Reference no: EM131437933

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