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Suppose a comp sale occurred at a transaction price of $500,000, and was financed by the seller with a $400,000 note, for 15 years at 3%. The market rate of interest at the time of the sale was five percent, what is the value of the favorable finance?
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- A commercial bill with a face value of $100,000 and 270 days to maturity is purchased with a yield to maturity of 4.65 per cent per annum. After the bill has been held for 110 days it is sold at a yield of 4.5 per cent per annum. What rate of return was earned by the original holder of the bill; that is, what is the holding period yield? Show your working.You make an investment into a money market account at time T=0. In year T=5, the value of the money market account will be $5,000. The money market account pays an annual interest of R=6%, and interest is compounded on a quarterly basis. What is the present value of this account?Which of the following statements is true? Group of answer choices If interest is 13% compounded annually, $1300 due one year from today is equivalent to $1,000 today. The higher the discount rate, the higher the present value. The process of accumulating interest on interest is referred to as discounting. If interest is 4% compounded annually, $1040 due one year from today is equivalent to $1000 today.
- For the following exercise, use the compound interest formula, A(t) = P 1 + r n nt , where money is measured in dollars.After a certain number of years, the value of an investment account is represented by the expression 10,950 1 + 0.03 2 24 . How many years had the account been accumulating interest? yrAn investor purchased a 91-day, $25,000.00 T-bill on its issue date for $24,851.61. After holding it for 54 days, she sold the T-bill for a yield of 1.55%. (a) What was the original yield of the T-bill? (b) For what price was the T-bill sold? (c) What rate of return (per annum) did the investor realize while holding this T-bill? (a) The original yield of the T-bill was%. (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.) (b) The T-bill sold for $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The investor realized a rate of return of (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed.)What is the present value of $25,000 to be received in 15 years at an (A) 6.2% interest rate and (B) 9.6% interest rate? Explain why the present value is lower when the interest rate is higher.
- Consider the followingalternatives: i. $120 received in one year ii. $220 received in five years iii. $350 received in 10 years a. Rank the alternatives from most valuable to least valuable if the interest rate is 7% per year. b. What is your ranking if the interest rate isonly 2% per year? c. What is your ranking if the interest rate is 14% per year?An investor purchased a 91-day, $10,000.00 T-bill on its issue date for $9915.98. After holding it for 66 days, she sold the T-bill for a yield of 3.01% (a) What was the original yield of the T-bill? (b) For what price was the T-bill sold? (c) What rate of return (per annum) did the investor realize while holding this T-bill? GOOOD (a) The original yield of the T-bill was% (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed) (b) The T-bill sold for $ (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.) (c) The investor realized a rate of return of% (Round the final answer to two decimal places as needed. Round all intermediate values to six decimal places as needed)Assume that at the beginning of the year, you purchase an investment for $6,500 that pays $95 annual income. Also assume the investment's value has increased to $7,050 by the end of the year. a. What is the rate of return for this investment? Note: Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.
- Honesty Company is investing in 5-year treasury bills with a face value of P500,000 and annual interest rate of 5%.How much is the market value assuming a 360 days in a year?Honesty Company is investing in 91-day treasury bills with a total fair market value of P2,500,000 for a purchase price of P2,475,000.What is the annualized discount rate (round off your answer to two decimal places)?Suppose that a 10-year T-note is purchased with a face value of $20,000 and a coupon rate of 3.4% (a) What is the total return of this investment? (b) What is the average rate of retum? (a) The total return is $ (Simplity your answer.) (b) The average rate of return is%. (Simplify your answer. Round to two decimal places as needed.)If the present value of $400 paid one year from now is $320, what is the one-year interest rate? (Note: this number is also known as the discount rate.)