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Ch.4 Extra Problems

# Ch.4 Extra Problems - C \$2,970.13 D \$3,725.73 E \$3,234.38...

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Ch.4 Extra Problems Annuity Due 1. What is the “true” value of the \$1 million prize won by the CFL fan in the first week’s lecture? Recall it was \$25,000 per year for 40 years. Assume the interest rate is 8% and the first payment is made immediately. A) \$298,115 B) \$321,964 C) \$426,991 D) \$675,274 E) \$789,100 Delayed Annuity 2. What is the present value of an annuity with payments of \$750 each year for eight years, if the first payment is made 4 years from today? The interest rate is 12% per year. A) \$2,367.77 B) \$2,651.90
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Unformatted text preview: C) \$2,970.13 D) \$3,725.73 E) \$3,234.38 Mortgage 3. You are planning to buy a new condominium in Toronto. The Condo is worth \$220,000; you will put a 25% down payment and obtain a 25-year fixed rate mortgage at 6.25% (APR semi-annually compounded) for the rest. Assume that monthly payments begin in one month. a) how much interest will you pay (in dollars) over the life of the loan? A) \$128,259.14 B) \$159,105.03 C) \$110,358.81 D) \$143,517.24 b) How much will you still owe at the end of 5 years?...
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