MA 373 F10 Test 2

MA 373 F10 Test 2 - Math 373 Test 2 1 A 20 year zero coupon...

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Math 373 Test 2 October 21, 2010 1. A 20 year zero coupon bond has a price of 100,000 at an annual effective interest rate of 3.6%. Calculate the maturity value of the bond.
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2. Candace is repaying a loan with level monthly payments of 1000. The interest rate on the loan is 6% compounded monthly. The principle in the 10 th payment is 831.49. Calculate the interest in the 22 nd payment.
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3. Brad is going to borrow 50,000 to be repaid over 9 years. He has the option of the following two loans: a. A loan with annual payments using the sinking fund method. The annual effective interest on the loan is 7% and the sinking fund earns interest at a annual effective rate of 5%. b. A loan with annual payments using the amortization method. The annual effective interest on the loan is 8%. Calculate the total annual payment under each loan. Which loan should Brad select and why?
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Mingjing has a loan of 100,000 which is being repaid with monthly payments of 3000. The final payment will be a Balloon payment of B. The interest rate on the loan is 18% compounded
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MA 373 F10 Test 2 - Math 373 Test 2 1 A 20 year zero coupon...

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