Ch.4 Practice - off 5 First simple Bank pays 7 simple interest on its investment accounts If First Complex Bank pays interest compounded annually

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FIN 3100 Chapter 4 Practice Dr. Lucy Ackert 1. If you put up $20,000 today in exchange for an 8.5%, 12 year annuity, what is the annual cash flow? 2. You want to have $30,000 in your savings account 8 years from now and you will make equal annual deposits to the account at the end of each year. If the account pays 5.25% interest, what amount will you deposit each year? 3. You want to buy a new sports car for $69,500. The APR for a 60-month loan is 8.6%. What are the monthly payments? 4. One of your customers is delinquent on an account. You agree to a repayment schedule of $500 per month and charge 1.1% per month on the overdue balance. If the balance is currently $13,850, how long will it take for the account to be paid
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Unformatted text preview: off? 5. First simple Bank pays 7% simple interest on its investment accounts. If First Complex Bank pays interest compounded annually, what rate should First Complex set if it wants to match First Simple over a 10 year horizon? 6. You want to buy a new car that costs $48,000. The dealer offers you a 60-month annuity due with a 7.45% APR. What is your monthly payment? 7. Ann is going to receive a 30-year annuity of $8,000. Elaine is going to receive a perpetuity of $8,000. If the discount rate is 9%, how much more is Elaine’s cash flow worth?...
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This note was uploaded on 04/06/2011 for the course ACCT 4050 taught by Professor Rodney during the Spring '11 term at University of Georgia Athens.

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