Chapter 2 section 4

# Chapter 2 section 4 - rate or interest rate is the same for...

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Chapter 2, Section 4 12. Kyle has agreed to pay Aaron 1000 now. In two years, Aaron will pay Andrew a payment of 600. At the end of four years Aaron will pay Kyle a payment of 700. Also, at the end of four years, Andrew will make a payment of 800 to Kyle plus a payment of 100 to Aaron. Using the bottom line approach, what is Kyle’s annual return on this transaction? 13. Mackenzie agrees to pay Kristen 500 today. Kristin agrees to pay Brooke 600 at the end of two years. At the end of T years, Brooke will pay Mackenzie 864.Using the bottom line approach, the annual yield
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Unformatted text preview: rate or interest rate is the same for each participant. Calculate T . 14. Cong, Jennifer, and Yifei enter into a financial arrangement. Cong agrees to pay Jennifer 3000 today. He also agrees to pay Yifei 1000 at the end of one year. At the end of three years, Yifei will pay Cong 4000. At the end of two years, Jennifer will pay X to Yifei and 1000 to Cong. Using the bottom line approach, the annual yield rate or interest rate is the same for Cong and Yifei. Calculate X . Answers: 12. 10.6682% 13. 6 years 14. 2573.56...
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