View the step-by-step solution to:

Question

a) Your friend deposits $2,500 into a savings account for 5 years. The account pays 14.1% p.a compounding

quarterly. The equivalent simple interest rate expressed on a per annum basis is is (as a percentage rounded to three decimal places; don't use % sign):????


B) You have the alternative of paying for university fees today for a payment of $16,000 or, you can select a payment plan where you pay $7,000 in 11 months from today and another $10,000 in exactly 24 months from today. If the interest rate is 10.1%p.a. compounding monthly, what is the advantage that the payment plan has over the upfront payment? (expressed in present day value rounded to the nearest cent; do not show $ sign or comma separators; if the payment plan is more costly than $16,000 today, your answer will show a negative eg. -300.35)


C) You invested $1,000 in a savings deposit 5 quarters ago and it has grown to $1605 today. What nominal rate of annual interest (compounding quarterly) did you earn? (expressed as a percentage to two decimal places; don't use the % sign)


D) Your business will pay you distributions of $16,000 in 12 months and another $13,000 in 23 months. If the discount rate is 7% per annum (compounding monthly) for the first 15 months, and 9% per annum (compounding monthly) for the next 8 months, what single amount received today would be equal to the two proposed payments? (answer to nearest whole dollar; do not use $ sign or commas)


E) Suppose you will receive $17,000 in 7 months and another $10,000 in 23 months. If the discount rate is 6% per annum (compounding monthly) for the first 10 months, and 13% per annum (compounding monthly) for the next 13 months, what single amount received today would be equal to the two proposed payments? (answer to the nearest whole dollar; don't include the $ sign or commas)

Top Answer

A. The effective interest rate is 14.86%. B. The amount is lower than the amount... View the full answer

Sign up to view the full answer

Other Answers

a. Compounding amount at year end 5 = $4998.56 Interest... View the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question