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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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
Transcribed Image Text:An insurance company is offering a new policy to its customers. Typically the policy is
bought by a parent or grandparent for a child at the child's birth. For this policy, the
purchaser (say, the parent) makes the following six payments to the insurance company:
First birthday
Second birthday
Third birthday
Fourth birthday
Fifth birthday
Sixth birthday
$890
$890
$990
$850
$1,090
$950
After the child's sixth birthday, no more payments are made. When the child reaches age
65, he or she receives $390,000. If the relevant interest rate is 11 percent for the first six
years and 7 percent for all subsequent years, what would the value of the deposits be
when the policy matures? (Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
Future value
of 8
TH
*
NEXT
C

Transcribed Image Text:es
You have just purchased a new warehouse. To finance the purchase, you've arranged for
a 30-year mortgage for 80 percent of the $3,200,000 purchase price. The monthly
payment on this loan will be $17,300.
a. What is the APR on this loan? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. What is the EAR on this loan? (Do not round intermediate calculations and enter
your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
a. Annual percentage rate
b. Effective annual rate
%
%
8
#
Next >
Expert Solution
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