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Unformatted text preview: Fall 2008 Engineering 120 Industrial Engineering &amp; Operations Research September 7, 2008 Page 1 of 2 Homework #2 Due: September 12, Friday at the beginning of the discussion section. 1. A 10-year annuity pays $900 per year, with payments made at the end of each year. The first $900 will be paid 5 years from now. If the APR is 8 percent and interest is compounded quarterly, what is the present value of the annuity? What if the APR is 8 percent compounded daily? 2. Suppose the data below is for 30-year loans with monthly payments. The loan amount is $100,000 each. Calculate the closing cost (beside points) for each of the four loans. ( Note: Closing cost is the same thing as fees.) Company As Of Rate APR Points Comments Home Finance America Mon Jan 28 2008 8.125 8.211 1-800-LOAN California Mortgage Mon Jan 28 2008 8.000 8.150 1.000 Altus Mortgage Mon Jan 28 2008 7.750 8.060 1.875 Lower rates available Chris Baker Mon Jan 28 2008 8.125 8.160 ZERO! No prepay penalties. 3. On September l, 1998, Susan Chao bought a motorcycle for $10,000. She paid $1,000 down and financed the balance with a five-year loan at a stated annual interest rate of 9.6 percent, com-and financed the balance with a five-year loan at a stated annual interest rate of 9....
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This note was uploaded on 06/15/2009 for the course ENGIN 120 taught by Professor Ilan during the Fall '08 term at Berkeley.
- Fall '08
- Operations Research