Author Question: In payment for his help with the construction of Valhalla, Wotan offers Fafner two alternatives. ... (Read 66 times)

RRMR · **on:** Apr 25, 2021

Question 1

If you buy a factory for $250,000 and the terms are 20% down, the balance to be paid off over 30 years at a 12 percent rate of interest on the unpaid balance, what are the 30 equal annual payments? (Round to the nearest whole dollar.)
◦ $20,593
◦ $31,036
◦ $24,829
◦ $50,212
◦ $6,667

Question 2

In payment for his help with the construction of Valhalla, Wotan offers Fafner two alternatives. First, he offers $1,260 per year forever (with the first payment in one year). Second, he offers his sister-in-law, Freia (the girl with the golden apples). If Fafner thinks that Freia is worth $12,000 and his required rate of return is 10.5%, which of the following is correct?
◦ Freia is more valuable.
◦ The perpetuity is more valuable.
◦ The two are equal in value. He is indifferent between them.

mochi09 · **Reply #1 on:** Apr 25, 2021

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