An Investor Wants to Determine How Much Interest He Must

question 27

Multiple Choice

An investor wants to determine how much interest he must earn to be able to make the payments on a 10-year mortgage which has increasing annual payments. The problem is summarized in the accompanying spreadsheet. The investor has enough money to make an initial investment of $9,000 and hopes he can earn 12%, compounded quarterly, on his investments. He would like to know how low his annual return can be and still allow him to make his payments from interest income. What formula goes in cell C7 of the spreadsheet?

• A) =B7*(1+$C$3/4)^4-B7
• B) =B7*(1+$C$3)-B7
• C) =B7*($C$3/4)^4-B7
• D) =B7*(1+$C$3/4)^4

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Definitions:

Negotiating outcomes

The results or agreements achieved at the end of a negotiation process, reflecting the interests and compromises of the involved parties.

Sense of direction

An understanding or intuition of how to proceed in a particular situation.

Negotiation Planning

involves preparing strategies and objectives before entering into negotiation talks to better position oneself for favorable outcomes.

BATNAs

A reiteration emphasizing the importance of understanding one’s best alternatives to a negotiated agreement as crucial leverage in negotiations.