Corporate Finance: The Core
4. You have found three investment choices for a one-year deposit: 10% APR compounded monthly, 10% APR compounded annually, and 9% APR compounded daily. Compute the EAR for each investment choice. (Assume that there are 365 days in the year.)
13. Oppenheimer Bank is offering a 30-year mortgage with an EAR of 5 3/8%. If you plan to borrow $150,000, what will your monthly payment be?
26. If the rate of inflation is 5%, what nominal interest rate is necessary for you to earn a 3% real interest rate on your investment?
34. Your best taxable investment opportunity has an EAR of 4%. Your best tax free investment opportunity has an EAR of 3%. If your tax rate is 30%, which opportunity provides the higher after-tax interest rate?
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