Down payment Annual payments Years Discount rate plan A 1.297.19 5.342.38 20 12% What is the present value of plan B? plan 8 2.869.46 7.761.18 20 12% plan C $1278 29 9449.95 20 12%
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- An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. What i are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is being offered a nominal rate of 4%. But the bank is compounding bimonthly (every two months). What is the effective interest rate that Rahul would pay for the loan? ○ 3.945% 4.152% 4.067% 04.186 % Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% comanded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days,…An annuity-due has 26 payments of $200 per period. The effective rate of interest per period is 8% for the first 12 periods and 4% for the following 14 periods. (A) Find the accumulated value of the annuity using the portfolio method. Round your answer to 2 decimal places. (B) Find the accumulated value of the annuity using the yield-curve method.. Round your answer to 2 decimal places.A rich relative has bequeathed you a growing perpetuity. The first payment will occur in a year and will be $3,000. Each year after that, you will receive a payment on the anniversary of the last payment that is 4% larger than the last payment. This pattern of payments will go on forever. Assume that the interest rate is 15% per year. a. What is today's value of the bequest? b. What is the value of the bequest immediately after the first payment is made? ARCKICHI a. What is today's value of the bequest? Today's value of the bequest is $(Round to the nearest dollar. b. What is the value of the bequest immediately after the first payment is made? The value of the bequest immediately after the first payment is made is $ (Round to the nearest dollar.)
- Which of the following statements is CORRECT? The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due. If a loan has a nominal annual rate of 8%, then the effective rate will never be less than 8%. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different. The proportion of the payment that goes toward interest on a fully amortized loan increases over time. An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%.Investments Jack invests $1000 at a certain annual interest rate, and he invests another $2000 at an annual rate that is one-half percent higher. If he receives a total of $190 interest in I year, at what rate is the $1000 invested?Problem 2 Suppose you purchased a house and took a 30 -year mortgage. The mortgage is unusual: you pay yearly, not monthly. The yearly payment is$17,000and the interest rate is4.2%. What is the amount of mortgage you took? (Round to two decimals.) Hint: find the PV of all the payments.
- ! Show Full Solution ! *using DEFERRED ANNUITY FORMULAS ONLY *use given data below Question: Today you invest P100,00 into a fund that pays 25% interest compounded annually. Three years later you borrow P50,000 from a bank at 20% annual interest and invest in the fund. Two years later you withdraw enough money from the fund to repay the bank loan and all interest due on it. Three years from this withdrawal you taking P20,000 per year out of the fund. After five withdrawals you withdrawn the balance in the fund. How much was withdrawn?A man invests his savings in two accounts, one paying 6 percent and the other paying 10 percent simple interest per year. He puts twice as much in the lower-yielding account because it is less risky. His annual interest is 6534 dollars. How much did he invest at each rate? Your answer is total in the account paying 6 percent interest is total in the account paying 10 percent interest isSheena bought a laptop at P120,000 if paid in cash. The laptop may also be purchased by installment to be paid within 5 years. If money is worth 8%, determine the amount of each annual payment if all payments are made at the beginning of the year. A. P30,054.77 B. P31,985.57 C. P29,985.59 D. P27,828.49
- Two annuity dues in perpetuity have a common present value of $2, 000 and a common effective annual interest rate i. The first annuity makes payments of $100 at the beginning of every three years and the second makes payments of X at the beginning of every three months. Find X.Multiperiod Consumption-Saving Plan Assume a person is 35 years old and plans to retire at age 65. So s/he has 30 more years to work. Assume the following additional information apply: Annual (real) income = $40,000 Real interest rate = 5% Expected live after retirement = 20 years Desired retirement income = 75% of pre-retirement income = $30,000 Prepare lifetime consumption-savings schedule for the person. First calculate how much s/he should have at retirement in order to consume $30,000 per year for 20 more years. This is the PV of annuity of $30,000 over 20 years at interest rate of 5%. 30,000* (PVIFAs°20) = $373,866.31. This amount is also equal to the future value of what s/he should save over her/his remaining 30 working years. (Annual saving)* (FVIFAS9,30) = $373,866.31. Solve for annual saving and you will get $5,627.22.You are planning to invest $4,000 in an account earning 8% per year for retirement. a. If you put the $4,000 in an account at age 23, and withdraw it 50 years later, how much will you have? b. If you wait 10 years before making the deposit, so that it stays in the account for only 40 years, how much will you have at the end? a. If you put the $4,000 in an account at age 23, and withdraw it 50 years later, how much will you have? In 50 years you would have $750424. (Round to the nearest cent.)