Two alternatives are being offered by the lender

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Reference no: EM13976318

Your money is tied up and you need to borrow $10,000. The following two alternatives are being offered by the lender.

1) Pay $3,288.91 at the end of each year for 5 years, starting at the end of the first year (5 payments total at 18% nominal per year compounded quarterly which equates to 19.25% effective or

2) Pay $X at the end of each quarter for 6 years, starting at the end of the first quarter(24 payments total at 18% nominal per year compounded quarterly)

Determine the value of $X that will make alternative 2 equally desirable to alternative 1 if

a) Your TVOM is 8% nominal per year compounded quarterly

b) Your TVOM is 22% nominal per year compounded quarterly

Reference no: EM13976318

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