Including the final quarter when the principal falls due

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1. If interest rates were 4 percent, how much would you give today for a loan with a $100,000 balloon principal payment due in a year and that will pay $16,000 in interest at the end of each quarter, including the final quarter when the principal falls due?

2. What is the value today of a share of stock that you think will be worth $50 in a year and that throws off $1 in dividends each quarter until then if the market interest rate is 1 percent?

Reference no: EM13877678

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