Suppose that annual income from a rental property is expected to start at $1,300 per year and decrease at a uniform amount of $50 each year after the first year for the 15-year expected life of the property. The investment cost is $80,000, and rate of interest is 9% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at end-of-year one.
A loan of $10,000 is to be repaid over a period of eight years. During the first four years, exactly half of the loan principal is to be repaid (along with accumulated compound interest) by a uniform series of payments of A1 dollar per year. The other half of the loan principal is to be repaid over four years, with accumulated interest, by a uniform series of payments of A2 dollar per year, If i=9% per year, what are A1 and A2?
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