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Chapter 2 section 3

# Chapter 2 section 3 - interest rate that Sarah has earned...

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Chapter 2, Section 3 5. Kunqi takes a loan 4000 with an annual effective interest rate of 4%. The loan is repaid with a payment of P at the end of one year and 2000 at the end of two years. Calculate P. 6. Zach repays a loan of 100,000 with a payment of 60,000 at the end of two years and another payment of 60,000 at the end of 4 years. Determine the effective annual interest rate that Zach pays on his loan. 7. Kim loans Jacqui 5000 so that she can buy a car. The annual effective interest rate on the loan is 8.5%. Jacqui repays the loan with a payments of 2968.27 at time T and at time 2T . Calculate T in months. 8. Sarah has 5000 in her bank account today. Five years ago, she deposited 2000 into her account. Additionally, three years ago, Sarah deposited 2200 into her account. Determine the annual effective

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Unformatted text preview: interest rate that Sarah has earned over the five year period. 9. Liangchen deposits 1000 into a bank account on January 1, 2011. Liangchen also deposits 300 on October 1, 2011. On December 31, 2011, Liangchen has 1400. Determine the annual effective interest rate earned by Liangchen during 2011. 10. Book Problem 2.3, Number 5. 11. Book Problem 2.3, Number 6. Hint: Find Anne’s effective annual interest using the cash flow and IRR functionality of your calculator. Put in 0 (zero) for the cash flows at time 1 and 3. Use this interest rate to determine when Frank should make his payment. Answers: 5. 2236.92 6. 6.3326% 7.17 months 8. 4.4847% 9. 9.3239% 10. T = 2.8248 years and T = 2.8649 years 11. 4.5143 years...
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Chapter 2 section 3 - interest rate that Sarah has earned...

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