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1st exam study problems solutions #2

# 1st exam study problems solutions #2 - 10.934 effective...

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Study Problems Solutions #2 Effective and Nominal Interest Answers 1. I finance a new car under the following terms: Purchase Price: \$31,500 Interest Rate: 7.25% APR compounded monthly Term: 72 months Down Payment: 10% \$28,350.00 Finance Balance What is the monthly payment? 0.604% Effective rate per month (\$486.75) Payment 2. In 1. above, what is the monthly payment if 7.186% Effective annual rate interest is 7% APR compounded quarterly? 6.960% APR compounded monthly 0.580% Effective rate per month (\$482.79) Payment 3. What nominal interest rate (APR) compounded monthly will grow \$1500 to \$6500 in 4 years if I make quarterly deposits of \$50.00? 16 Number of quarters in 4 years 7.823% Effective rate per quarter 31.294% APR compounded quarterly 35.161% Effective annual rate 30.511% APR compounded montly 4. I make an initial deposit of \$7000 followed by monthly withdrawals of \$50 per month. If the nominal APR is 10.65% compounded semi-annually, a. What is my balance in 25 years?
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Unformatted text preview: 10.934% effective annual rate 10.934% b. What is my balance in 25 years if I withdraw \$70 per month 10.421% APR compounded monthly 10.421% instead of \$50 per month? 300 Number of months in 25 years 0.868% effective rate per month a \$22,386.12 Amount I can withdraw b (\$6,133.55) Amount I'm overdrawn 5. I borrow \$10,000 at an interest rate of 11% APR compounded 11.628% Effective annual rate continuously with monthly payments of \$256.25. Two years from 11.051% APR compounded monthly now I can re-finance the then remaining balance @ 10.5% APR 0.921% Effective rate per month compounded quarterly with the same monthly payments. (\$5,613.28) Loan balance in 2 years How long would it take (months) to pay the loan down to 10.921% Effective annual rate a \$1000.00 remaining balance from today? 10.409% APR compounded monthly 0.867% Effective rate per month 20.4 Months from refinance 44.4 Months from start of loan...
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