As a result of certain debt obligation a company must pay $15000 a year for the...

As a result of certain debt obligation a company must pay $15000 a year for the next 10 years. The next payment is due one year from now. The company wants to cancel this debt over the next 4 years. If the interest rate is 9% compounded annually, what is the payment for the next 4 years?

Expert Solution

Calculate he present value of the payment for ten years as follows:

Present value is $96,264.87.

-------------------------------------------------------------------------------------

Calculate the payments for next four years as follows:

Payment for next four years is $29,713.95.

jeff jeffy answered 7 months ago

An insurance company accepts an obligation to pay $7,000 at the end year 1, pay $8,000...

An insurance company accepts an obligation to pay $7,000 at the end year 1, pay $8,000 at the end of year 2, and pay $9,600 at the end of year 3. The insurance company purchases a combination of the following three bonds in order to exactly match its obligation. • Bond 1: 1-year 6% annual coupon bond with yield rate of 8%. • Bond 2: 2-year zero coupon bond with yield rate of 7%. • Bond 3: 3-year 20% annual...

An insurance company agrees to pay the promoter of a drag race $15000 if the race...

An insurance company agrees to pay the promoter of a drag race $15000 if the race has to be canceled because of rain. If the company's actuary feels that a fair net premium for this risk is $2400, what does this tell us about his assessment of the probability that the race will have to be canceled because of rain? （Please indicate the formula and Explain each step in detail. Thank you.）

Randy currently has an obligation that he will pay $1 million a year for the next...

Randy currently has an obligation that he will pay $1 million a year for the next 3 years, what is the duration of his obligation if the appropriate discount rate is 5%? If Randy wants to immunize his obligation using a 1-year zero coupon bond and a perpetuity both yielding 6%. I rounded the durations to two decimal places to minimize rounding errors. What is the weight he should invest in the zero? What is the weight he should invest...

Construct the amortization schedule for a $15000 debt that is to be amortized in 10 quarterly...

Construct the amortization schedule for a $15000 debt that is to be amortized in 10 quarterly payments at 3% interest per quarter on the unpaid balance.

California issued debt (general obligation bonds) to fund the state budget and must now repay what...

California issued debt (general obligation bonds) to fund the state budget and must now repay what it borrowed. Given the facts above, please indicate if you think that California’s debt is more likely to be internal or external. How do you know? Furthermore, is the repayment of state and local government debt likely to drain purchasing power from citizens in those areas?

Question 1 The demand for cars in a certain country is given by D = 15000...

Question 1 The demand for cars in a certain country is given by D = 15000 – 100P; where P is the price of a car. Supply by domestic cars producers is S = 8000 + 40P. (a) Assuming that the economy is closed, find the equilibrium price and production quantity of cars in that country. (b) The economy opens to trade. The world price of a car is $80. Find the domestic quantities demanded and supplied and the quantity...

What is the term used to refer to the yield on a long-term (20-year) debt obligation...

What is the term used to refer to the yield on a long-term (20-year) debt obligation issued by the U.S. government?

1. a. Which of the following is an obligation of the lessor? (pay the rent on...

1. a. Which of the following is an obligation of the lessor? (pay the rent on or before the due date , Provide a dwelling that is habitable , give at least 30-days notice of intent to move , or all of the above are obligations of the lessor) b. Which of the following would generally be considered an advantage of renting? (lack of privacy , small living space , lack of storage space , or minimum responsibilities)

With a certain medical insurance policy, the customer must first pay an annual $100 deductible, and...

With a certain medical insurance policy, the customer must first pay an annual $100 deductible, and then the policy covers 60% of the cost of dental work. The first dental insurance claims for a specific year submitted by a person are for two procedures. The first procedure cost $700, and the second procedure cost $990. How much, in total, will he need to pay for these procedures?

With a certain medical insurance policy, the customer must first pay an annual $350 deductible, and...

With a certain medical insurance policy, the customer must first pay an annual $350 deductible, and then the policy covers 80% of the cost of x-rays. The first insurance claims for a specific year submitted by a person are for two x -rays. The first x-ray cost $680 and the second x-ray cost $930. How much, in total, will he need to pay for these x-rays?

Question