You receive a credit card application from XYZ Banks Savings and Loan offering an introductory rate of 2.5 percent per year, compounded monthly for the first six months, increasing thereafter to 17 percent compounded monthly. Assuming you transfer the K5,000 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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QUESTION FIVE
You receive a credit card application from XYZ Banks Savings and Loan offering an introductory rate of 2.5 percent per year, compounded monthly for the first six months, increasing thereafter to 17 percent compounded monthly. Assuming you transfer the K5,000 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the
first year?


You are planning to save for retirement over the next 30 years. To do this, you will invest K600 a month in a stock account and K300 a month in a bond account. The return of the stock account is expected to be 12 percent, and the bond account will pay 7 percent. When you retire, you will combine your money into an account with a 9 percent return. How much can you withdraw each
month from your account assuming a 25-year withdrawal period?


Bernard wants to save money to meet three objectives. First, he would like to be able to retire 30
years from now with retirement income of K20,000 per month for 20 years, with the first payment received 30 years and 1 month from now. Second, he would like to purchase a cabin in River-Side in 10 years at an estimated cost of K325,000. Third, after he passes on at the end of the 20 years of withdrawals, he would like to leave an inheritance of K750,000 to his nephew Frodo. He can afford to save K2,000 per month for the next 10 years. If he can earn an 11 percent EAR before he retires and an 8 percent EAR after he retires, how much will he have to save each month in years 11 through 30?

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