Question

1) The value of a bond can be found by A. Calculating the present value of...

1) The value of a bond can be found by

A. Calculating the present value of an annuity (interest payments)

B. Calculating the present value of a lump sum (the principal)

C. None of the above

D. Both A and B

2. You have just purchased a new warehouse. To finance the purchase, you’ve arranged for a 30-year mortgage loan for 80 percent of the $3,500,000 purchase price. The monthly payment on this loan will be $20,000. What is the EAR on this loan?

A. 8.5152% B. 7.9982% C. 7.7192% D. 8.4307% E. 9.3047%

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The answer has been presented in the supporting sheet. For detailed answer refer to the supporitng sheet.

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