Unformatted text preview: sts
between the interest rate and the amount of time it will take Manuel to double his money? LG6 4–55 Number of years—Annuities In each of the following cases, determine the
number of years that the given annual end-of-year cash flow must continue in
order to provide the given rate of return on the given initial amount.
Case Initial amount Annual cash flow A $ 1,000 B 150,000 30,000 15 C 80,000 10,000 10 $ 250 Rate of return
11% D 600 275 9 E 17,000 3,500 6 CHAPTER 4
LG6 4–56 CHAPTER 4 CASE Time Value of Money 187 Time to repay installment loan Mia Salto wishes to determine how long it will
take to repay a loan with initial proceeds of $14,000 where annual end-of-year
installment payments of $2,450 are required.
a. If Mia can borrow at a 12% annual rate of interest, how long will it take for
her to repay the loan fully?
b. How long will it take if she can borrow at a 9% annual rate?
c. How long will it take if she has to pay 15% annual interest?
d. Reviewing your answers in parts a, b, and c, describe the general relationship
between the interest rate and the amount of time it will take Mia to rep...
View Full Document