ACC00716 Finance Assessment 2: Business Case Studies 1

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1. TVM and bond valuation questions (1 mark each):

a. Your case company has just made a large sale on an installment contract. The contract requires the customer to pay your case company the amount shown in Table 1 (page 4 of this document) at the end of every month for 4 years. Your case company would like the cash now for an investment, and so has asked its bank to discount the installment contract and pay it the discounted value. The bank will discount the contract at 7% APR, compounded monthly. How much cash will your case company receive from the bank?

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