uestion 4(3 points) Ahmad has decided to purchase ahouse instead of renting an a
ID: 1165082 • Letter: U
Question
uestion 4(3 points) Ahmad has decided to purchase ahouse instead of renting an apartmen?e has S6000 to use as a present down payment for the house and agreed with the bank to payments of $2000 starting one month from now. If the nominal interest rate of is 12% per year compounded monthly and the loan will be paid in 7 years, how much will Ahmad pay for this house in total at the end of the 7 years? pay monthly the loan uc oints You decided to deposit a lump sum amount of money now into a bank account so that 5000 can be withdrawn in years 3, 6,7,8, 9, and 10, as shown in the cash-flow diagram below. Calculate the lump sum amount of money needed to be deposited at the present time if the effective interest rate is 10%. $5000 $5000 $5000 S5000 $5000 $5000 9 10 Determine the value of "Y" on the right side of the figure below that makes the two cash flow diagrams equivalent when i-15% per year $2,000 $2,000 $2,000 $1,500Explanation / Answer
Ans for 5)
To find the Present worth of lumpsum amount we need to find present worth of each payment stream in future
PW of Lumpsum=5000((1/1.1^3)+(1/1.1^6)+(1/1.1^7)+(1/1.1^8)+(1/1.1^9)+(1/1.1^10))=$15525.48
Hence Present worth of Lumpsum amount in current time is $15525.5
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