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Unformatted text preview: b. $2,000 (2.518) = $5036 $24,000 (0.397) = $9528 It would be better in this situation to take the $10,000 up front because it would be a better alternative to the $24,000 received in eight years that would only yield $9,528, and it would be more than the $5,036 returned from the $2,000 per year over eight years. 9) $60,000 (1.967) = $118,020/7 years = $16,860/year in annual payments. In my first payment, I will pay $118,020 - $60,000 = 58020/7 = $8,289 in interest and $8,571 toward the principal. The second payment will leave me a bit more ahead in interest as I will only be paying $58020 8289 = 49731/7 = $7104, but I will pay more in principal ($9756)to meet my annual payment of $16,860....
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This note was uploaded on 06/15/2011 for the course KIN 356 taught by Professor Warner during the Fall '09 term at University of Texas at Austin.
- Fall '09