What would be the equal annual end-of-year payment

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Reference no: EM131309615

1. Should you prefer to receive $100,000 right now or $10,000 at the end of each of the next 12 years?

a $100,000 now

b $10,000 at the end of each of the next 12 years

c The answer depends on the time value of money.

d Either alternative is equally valuable.

2. A friend of yours would like you to lend him $5,000 today to be paid back in 5 annual payments. What would be the equal annual end-of-year payment on this loan if you charge your friend 7% interest?

a $869.45

b $1,000.00

c $1,219.51

d $1,350.00

Reference no: EM131309615

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