Reference no: EM132497811

You have an investment opportunity that requires an initial investment of $5000 today and will pay $6000 in one year. What is the rate of return of this opportunity?

You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30-year mortgage that requires annual payments and has an interest rate of 7% per year. What will your annual payment be if you sign this mortgage?

You intend to endow a scholarship that pays $5000 every 6 months, starting 6 months from now on forever. If the appropriate discount rate is 2% per 6-month period, how much money will you have to donate today to endow the scholarship?

You have just deposited $1000 in an unusual bank account that pays interest biannually (once every 2 years). If the 2-year interest rate is 8% (total interest over 2 years is 8%, not 8% per year), how much will you have in the account after 6 years?