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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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