FIND A SOLUTION AT Academic Writers Bay

Question 1

a) A company is due to receive a payment of £500,000 from a customer in 6 months’ time.

To smooth its cashflows, the company would prefer to receive the payment

immediately, and has agreed to transfer its entitlement to this payment to a third

party (a discount house) in return for an immediate payment calculated using a rate

of commercial discount of 16% per annum.

How much will the immediate payment made by the discount house be?

b) An investor puts £5,000 in a savings account that pays 10% simple interest at the end

of each year. Compare how much the investor would have after 6 years if the money

was:

i. Invested for 6 years

ii. Invested for 3 years, then immediately reinvested for a further 3 years.

c) £250 is invested in a savings account. The nominal rate of interest convertible monthly

for the first 3 months is 18% and the nominal rate of interest convertible quarterly for

the next 9 months is 20%. How much is in the account at the end of the year?

d) You have deposited $1000 in a savings account today, and the interest rate is

5% per year. What is the future value of this cash flow 3 years from today

e) The force of interest is given by:

- Assignment status: Already Solved By Our Experts
*(USA, AUS, UK & CA PhD. Writers)***CLICK HERE TO GET A PROFESSIONAL WRITER TO WORK ON THIS PAPER AND OTHER SIMILAR PAPERS, GET A NON PLAGIARIZED PAPER FROM OUR EXPERTS**

QUALITY: 100% ORIGINAL PAPER – **NO PLAGIARISM** – CUSTOM PAPER