Solutions to Chapter 1

Therefore, the effective annual interest rate on the loan is: (1.008333)12 ( 1 = 0.1047 = 10.47 percent. 22. a. PV = 100 ( annuity factor(6%, 3 periods) = 100 ( b. If the payment stream is deferred by an additional year, then each payment is discounted by an additional factor of 1.06. ................
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