Asked by Lesley Horcasitas on Jun 07, 2024
Verified
A contract requires payments of $1,000, $2,000, and $3,000 in 90, 120, and 150 days respectively, from today. What is the value of the contract today if the payments are discounted to yield a 6% simple interest rate of return?
Discounted
Reduced in price or value, often to encourage purchase or reflect the present value of future cash flows.
Simple Interest
Simple interest is a method of calculating the interest charge on a loan or investment based on the original principal amount and not on accumulated interest.
Contract
A legally binding agreement between two or more parties that outlines terms and conditions.
- Acquire the capability to compute simple interest and determine the maturity value of promissory notes.
- Evaluate and decide between investment options based on their simple interest yield.
Verified Answer
VB
Learning Objectives
- Acquire the capability to compute simple interest and determine the maturity value of promissory notes.
- Evaluate and decide between investment options based on their simple interest yield.