Interest Paid For 4 Years $14,287.00: Year Line A Line B 0 1 $40,000 $28,000 2 $40,000 $28,000 3 $28,000 4 $28,000 5 6
Interest Paid For 4 Years $14,287.00: Year Line A Line B 0 1 $40,000 $28,000 2 $40,000 $28,000 3 $28,000 4 $28,000 5 6
i
n
$90,000.00
6.50%
15
Loan installment
Installment without interest
Interest paid for 4 years
16 Day of Deposit
Last Day
Deposit
Interest rate (quarterly)
Years of deposit
Balance
$9,571.75
$6,000.00
$14,287.00
1-Jan-07
31-Dec-15
$1,000.00
3%
9
1,308.65
17
18 D
RRF
$1.75
1.22
RPm
5%
6%
3%
g
Rs
P0
9%
$56.45
NPV
10%
Line A
($68,000)
$40,000
$40,000
Line B
($80,000)
$28,000
$28,000
$28,000
$28,000
$1,421.49
$8,756.23
Since, NPV for Line B is highest, we will consider line B is the best Choice
20 - a
20-b
20-c
20-d
20-e
7.00%
7.00%
7.00%
7.12%
6.90%
7.08%
6.85%
7.07%
6.66%
6.89%
7 common stock
preferred stock
60%
40%
12
14.00%
State of Economy
Boom
Probability of
State of
Economy
Stock A
64%
21%
Bust
36%
0.236643
0.143319
20.30%
15%
Line C
($107,000)
$26,000
$26,000
$26,000
$26,000
$26,000
$26,000
$6,236.78
Stock B
Stock C
15%
35%
11%
17%