tern Associates is considering a project that has the following cash flow data.

ID: 2706101 • Letter: T

Question

tern Associates is considering a project that has the following cash flow data. What is the project's payback?

Year 0 1 2 3 4 5

Cash flows -$1,100 $300 $310 $320 $330 $340

Answer

Consider a 12-year loan with annual payments at 5%. If the loan amount is $250,000, compute the interest paid in the eighth year.

ABC Company offers a perpetuity which pays annual payments of $19,963. This contract sells for $254,349 today. What is the interest rate?

2.31 years 3.52 years 2.85 years 3.16 years 2.56 years

Consider a 12-year loan with annual payments at 5%. If the loan amount is $250,000, compute the interest paid in the eighth year.

ABC Company offers a perpetuity which pays annual payments of $19,963. This contract sells for $254,349 today. What is the interest rate?

2.31 years

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