× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
L
3
d
3
y
3
a
3
n
3
d
3
e
3
d
3
c
3
p
3
M
3
a
3
Home Q & A Board Science-Related Homework Help Mathematics
New Topic  
majarm majarm
wrote...
Posts: 406
Rep: 0 0
6 years ago
BlackBerry took a loan contract which requires a payment of $40 million plus interest two years after the contract's date of issue. The interest rate on the $40 million face value is 9.6% compounded quarterly. Before the maturity date, the original lender sold the contract to a pension fund for $43 million. The sale price was based on a discount rate of 8.5% compounded semi-annually from the date of sale. How many months before the maturity date did the sale take place?
Textbook 
Contemporary Business Mathematics with Canadian Applications

Contemporary Business Mathematics with Canadian Applications


Edition: 11th
Authors:
Read 56 times
1 Reply

Related Topics

Replies
wrote...
#1
6 years ago
The selling price represents the present value of the loan's maturity value on the date of sale. Therefore, the solution requires two steps: (1) calculate the maturity value of the debt; (2) determine the length of time over which the maturity value was discounted to give a present value of $43 million.
n = 4 × 2 = 8 and i =   = 2.4%
FV = $40   = $48.357 million

For discounting the maturity value, i =   = 4.25%
n =   =   =   = 2.82
Therefore, the date of sale was 2.82 × 6 = 17 months before the maturity date
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1002 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Related Images
  
 99
  
 380
  
 350
Your Opinion
Do you believe in global warming?
Votes: 423
Previous poll results: Where do you get your textbooks?