Emilie Gein
Homework 3
21. 2004, lb apples .99, oranges 1.14.
1994, lb apples .72, oranges .55
Apples: (.99/.72)
1/10
1= 3.23%
.99(1.0323)
20
= 1.86962
Oranges: (1.14/.72)
1/10
1=4.7%
1.14(1.047)
20
= 2.86
22. 8,000 car loan for 48 monthly payments, APR 10%, what is monthly payment? Effective annual
interest rate?
8,000=X(1/.00833 – 1/(.00833x1.00833
48
))
X=203.11
EAR=(1+APR/M)
m
1= (1+.1/12)
12

1=10.471%
23. PV of 3year annuity of $100, r=6%?
100x (1/.06 1/(.06x1.06
3
))= 267.305
PV of 3year annuity wait 2 years for 1
st
payment? 267.305/(1.06
2
)= 237.9005
28.
8,000 car loan for 48 monthly payments of $240each, what is APR? What is Effective annual
interest rate?
8000=240( 1/r – 1/(r x (1+r)
48
)))
using calculator the APR= 19.2%, EAR=( 1+19.2%/12)
12

1 =20.983%
35.Annual payment of 10,000 for 10 years. First in 4 years. R=5%
10,000 x (1/.05 1/(.05x 1.05
10
)= 77217.3
77217.3/(1.05
4
)= 63526.86381
43. Borrowed 100,000, monthly payments 804.62 for 30 years. r=?, ear?
100,000= 804.62(1/r 1/(r x (1+r)
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 Spring '08
 someguy
 Annual Percentage Rate, Debt, monthly payments

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