EGR310 Homework Week 2
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Homework Set 2
EGR 310
Homework Week 2.Due to Sunday 18,2024 Midnight PST
1.
(0.25 pts) $1000 is borrowed for one year at 1.5% per month. If the same amount could be borrowed at 18% per year, how much could be saved? What is the nominal and effective rate for each investment alternative. (Chapter 3)
a.
18% per year $1000 x 1.18 = $1180
1.5% per month $1000 x (1 + 0.015)^12 = $1196
$1196 - $1185 = $16 saved
at annual rate of 18%
Nominal rate 18%
Effective rate 1.5% = (1 + 0.015)^12 – 1 = 19.6%
2.
(0.25 pts) If you invest $3000 into an account that compounds 7% continuously, what is the annual effective rate? (Chapter 3)
a.
Effective annual interest rate = ( 1 + 0.07)^12 – 1 ≈
1.25%
3.
(0.5 pts) You just bought a house for $500,000. You put 20% down and financed the rest over 20 years at 3% nominal interest. Assuming equal monthly payments over the term of the loan, what are the monthly payments? What is the effective rate? (Chapter 4)
a.
$500,000 x 0.20 = $100,000 down payment, financing $400,000
. Monthly rate is 3%/12 = 0.25%
m periods = 12 months x 20 years = 240
Monthly payment = $400,000 x (A/P, 0.25%, 240) = $400,000 x 0.00555 = $2220
month
Effective rate = (1 + 0.0025)^12 – 1 = 3.04%
4.
(0.5 pts) What would you need to invest today in an account that had a nominal rate of 12% compounded quarterly, if you wanted $9000 in 5 years? What would be the investment required if the account compounded monthly? What is the effective rate of each investment? (Chapter 3)
a.
F = $9000 i = 12% / 4 quarters = 3% quarterly rate
n = 5 years x 4 quarters = 20 interest periods
P = $9000 ( P/F, 3%, 20) = $9000 x 0.5537 ≈
$4983
Effective rate = (1 + 0.03)^4 – 1 = 12.6%
12% / 12 months = 1% monthly rate
n = 5 x (12 months) = 60 interest periods
P = $9000 ( P/F, 1%, 60) = $9000 x 0.5504 ≈
$4954
Effective rate = (1 + 0.01)^12 – 1 ≈
12.7%
5.
(0.5 pts) Assume we receive $1200 at the end of each year for 6 years. What is the equivalent value of the cash flows at time period 0 assuming 5% interest? What is the equivalent value at the end of time period 6 assuming 5% interest?
(Chapter 4)
a.
P = A( P/A, 5%, 6) = $1200 (5.076) = $6091
F= A( F/A, 5%, 6) = $1200 (6.802) = $8162
6.
(0.5 pts) Assume the following cash flows: (Chapter 4)
Assuming an 8% interest rate, what is A?
7.
(0.5 pts) The maintenance on a piece of equipment is $800 at the end of year 1 and increases $200/yr each year until the end of the 4 year life of the equipment. Assuming you could invest at
6%, what amount would you need today to cover all the maintenance costs in the future? (Chapter 4) $3485.24 to cover all future maintenance costs.
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Related Questions
es of Finance | ZSpring20 spring21
Time left 1:03:51
You intend to buya farm in seven years and plan to have saved OMR 75,200 for a down payment. How much money would you have to place today into an investment that earns 8% per year
to have enough for your desired down payment?
O a 43,878.48
Ob. 128,879.59
O. 57,440.67
Od. 31,934.26
Oe 88,810.65
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Problem Set 1: Finance
Score: 19.8/50
8/20 answered
Question 10
You deposit $3000 each year into an account earning 5% interest compounded annually. How much will you
have in the account in 20 years?
no.
Question Help: D Video 1 D Video 2
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Chapter 5: Simple and Compound Interest - Homework
Score: 50.42/100
19/32 answered
Question 15
How much would you need to deposit in an account now in order to have $2000 in the account in 15 years?
Assume the account earns 6% interest compounded monthly. Round to the nearest cent.
Submit Question
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nt question
Q1. Find the present value of 30 annual payments of $2,000 per annum where the first payment is made 14 years from now. So there are 30 annual payments from t=14 to t=43 inclusive. The discount rate is 5% pa. The present value of these payments is:
Question 8Select one:
a.
$4,908.18
b.
$16,304.68
c.
$21,212.85
d.
$30,282.15
e.
$30,744.9
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Question 20
You owe $26,000 on student loans at an interest rate of 3.6% compounded monthly. You want to pay off the
loan in 15 years. You should show your work for this problem.
nts
What will your monthly payments be?
How much interest do you pay?
> Next Question
mplete
31
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Chapter 5: Simple and Compound Interest - Homework
Score: 50.42/100 18/32 answered
• Question 19
>
Suppose you invest $3300 in an account with an annual interest rate 12% compounded monthly (1% each
month).
Use this information to complete the table below. Round to the nearest cent as needed.
1% Interest
Month
Starting Balance
Ending Balance
on Starting Balance
$3300
$33
$3333
2
$3333
3.
$3399,99
4
$3399.99
$34.34
Submit Question
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FIN2230 Chapter 9 Assignment i
4
If you invest $14,500 per period for the following number of periods is received at the beginning of each year. (Annuity in advance)
(Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.)
a. 9 years at 4 percent
Future value
$
b. 16 years at 12 percent
Future value
$
c. 20 periods at 15 percent
Saved
Future value
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pse
Module 11: Interest and Annuities
Suppose you make a lump-sum investment of $10,000 in an account earning 7% interest
compounded monthly. How many years will it take for your investment to grow to $100,000?
SHOW YOUR WORK IN STEPS.
(Round your answer to the nearest tenth of a year.)
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Picture Tools
Format
O Tell me what you want to do...
Exercise 10. Loan Payments A student loan of $50,000 at a fixed APR of 6% for
20 years
(10a) Calculate the monthly payment
P x
APR
РMТ
(-nY)1
1+
APR
(10b) Determine the total amount paid over the term of the loan.
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ll.6
Please make sure to Data Analytics Project #3 completed before answering this question. Click on the "Loan" worksheet. The annual payment on the loan worksheet should be $14,168.37 per year and the monthly payment should be$1,169.67 per month. Which of the following statements is TRUE if we change the down payment to zero and APR (annual percentage rate) to 6.00%? O Both the annual payment and monthly payment will decrease. The annual payment will stay the same and the monthly payment will increase. O The annual payment will increase but the monthly payment will decrease. O Both the annual payment and monthly payment will both increase.
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es of Finance | ZSpring20 spring21
Time left 1:25:4
If for the next 30 years you place OMR 3,610 in equal annual year-end-deposits into an account earning 11% per year, how much money will be in the account at the end of that time period?
O a. OMR 797,496.56
O b. OMR 553,408.61
Oc OMR 34,836.90
Od. OMR 718,465.37
Oe OMR 31,384.59
CLEAR MY CHOICE
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Q Search
Saud borrowed $90,000 now. He will pay off the loan with 10 equal quarterly payments. The first payment will be on end of quarter 2. The interest rate is 12% compounded
quarterly. What is the amount of the quarter payments?
Answers: $ 15, 928.60
$ 11,193.29
$ 10,550.75
$ 12,001.63
NPOG
5292
28
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Part 1
Jane Doe plans to make eleven end-of-month payments of$16,000each on a short term investment account. The account earns a monthly interest rate of 3%.a. What is the present worth (i.e.,P0)of these payments? b. Repeat Part (a) but assuming that they are beginning-of-month payments.
a. The present equivalent of the payments is $ (Round to the nearest dollar.)
b. The present equivalent of the payments is $. ( Round to the nearest dollar )
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Intro
You decided to save $1,400 every year, starting one year
from now, in a savings account that pays an annual
interest rate of 5%.
Part 1
74440
How many years will it take until you have $100,000 in
the account?
1+ decimals
Submit
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un.4
How much will you have to deposit into an account at the beginning of every 3 months for 20 years if you want to have a balance of $100 000 and interest is 8% compounded quarterly?
a
$506
b
$516
c
$524
d
$520
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Question content area top
Part 1
(Comprehensive problem) You would like to have
$57,000
in
14
years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn
6
percent interest compounded annually. Your first payment will be made at the end of the year.
a. How much must you deposit annually to accumulate this amount?
b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn
6
percent on this deposit.)
c. At the end of five years, you will receive
$15,000
and deposit this in the bank toward your goal of
$57,000
at the end of year
14.
In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn
6
percent on your deposits.)
Question content area bottom
Part 1
a. How much must you deposit annually to accumulate this amount?…
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Question content area top
Part 1
(Comprehensive problem) You would like to have $
60,000 in
14 years. To accumulate this amount, you plan to deposit an equal sum in the bank each year that will earn
6 percent interest compounded annually. Your first payment will be made at the end of the year.
a. How much must you deposit annually to accumulate this amount?
b. If you decide to make a large lump-sum deposit today instead of the annual deposits, how large should this lump-sum deposit be? (Assume you can earn
6 percent on this deposit.)
c. At the end of five years, you will receive $
10,000 and deposit this in the bank toward your goal of $
60,000 at the end of year
14. In addition to the lump-sum deposit, how much must you deposit in equal annual amounts, beginning in year 1 to reach your goal? (Again, assume you can earn
6 percent on your deposits.)
Question content area bottom
Part 1
a. How much must you deposit annually to…
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Problem 06.027 AW of a Permanent Investment
How much must you deposit each year into your retirement account starting now and continuing through year 12 If you want to be able
to withdraw $75,000 per year forever, beginning 34 years from now? Assume the account earns Interest at 9% per year.
The amount to be deposited is determined to be $ 5242.86
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QUESTION 9
Norbert Chapa is saving for retirement by putting away $6,090.00 every day for 6 years. How much is this investment worth at the end of 6 years if payments begin today"
Assume an interest rate of 1.00%.
Oa. $35,295.42
b. $12,945,053.24
Oc. $13,745,519.33
O d. $37,466.80
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Ch 05- Video Lesson - Time Value of Money
Suppose Alex receives a $28,000.00 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 3%
compounded annually.
Use the formula for the present value of an ordinary annuity to find this payment amount:
PVAN =
PMT =
PMT X
PVAN X
(1+) N
I
In this case, PVAN equals
(1+ŋ)N
is
, I equals
Using the formula for the present value of an ordinary annuity, the annual payment amount for this loan is
and N equals
Because this payment is fixed over time, enter this annual payment amount in the "Payment" column of the following table for all three years.
The interest paid in year 1 is
Each payment consists of two parts-interest and repayment of principal. You can calculate the interest in year 1 by multiplying the loan balance
at the beginning of the year (PVAN) by the interest rate (I). The repayment of principal is equal to the payment (PMT) minus the interest charge
for the year:
Enter the values for interest…
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QUESTION 14
You have taken a loan of $300,000 over 12 years at a 6% interest rate compounded monthly, which is reimbursed
with monthly payments. What is the principal portion of the 61st payment?
O1,925.55
1,933.14
O654.56
449.86
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Question 15
What is the present value of your investment if you deposited $100.00 into your
bank account at the beginning of each quarter for 10 years if the bank pays interest
is 6% compounded semi-annually?
a. $2,854.90
b. $3,036.46
c. $1,628.23
d. $3042.28
e. $900.17
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uestion 5
When you start your career, you decide to set aside $600 every month to deposit into an investment account. The investment firm daims that historically their accounts have
earned an annual interest rate of 11.0% compounded monthly. Assuming this to be true, how much money will your account be worth after 25 years of depositing and
investing? Round your answer to the nearest cent. Do not include labels or units. Just eriter the numerical value
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Question 1
If the interest payments are done semi-annually, what is the initial investment to be so that 6 years later the amount will be TL84.000?
Interest rate is 26% pa.
Your answer:
3,621
O 19,379
22,992
25,347
50,694
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R
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# 3
Problem Set 1: Finance
Progr
Score: 19.8/50
8/20 answered
Question 15
You want to be able to withdraw $35,000 from your account each year for 25 years after you retire.
You expect to retire in 15 years.
If your account earns 6% interest, how much will you need to deposit each year until retirement to achieve
your retirement goals?
24
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compounded monthly, or borrow the money from your parents, who want an interest payment of 7% every six months.
Which is the lower rate? (Note: Be careful not to round any intermediate steps less than six decimal places.)
The effective annual rate for your credit card is
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- es of Finance | ZSpring20 spring21 Time left 1:03:51 You intend to buya farm in seven years and plan to have saved OMR 75,200 for a down payment. How much money would you have to place today into an investment that earns 8% per year to have enough for your desired down payment? O a 43,878.48 Ob. 128,879.59 O. 57,440.67 Od. 31,934.26 Oe 88,810.65 NEXT PAGE 28 Finis CONTACT US P Type here to search 144 %23 prt sc delete 4 6. 7. V. 8 - backspace T 44 G 13 K C M 10 pause alt ctrlarrow_forward* 00 Problem Set 1: Finance Score: 19.8/50 8/20 answered Question 10 You deposit $3000 each year into an account earning 5% interest compounded annually. How much will you have in the account in 20 years? no. Question Help: D Video 1 D Video 2 Submit Question MacBook Air 08 F3 DD F1 F2 F4 & i 1 # 2$ 2 4. 5. R A Harrow_forwardChapter 5: Simple and Compound Interest - Homework Score: 50.42/100 19/32 answered Question 15 How much would you need to deposit in an account now in order to have $2000 in the account in 15 years? Assume the account earns 6% interest compounded monthly. Round to the nearest cent. Submit Question 80 F1 DIL F2 F3 F4 F5 E7 FE @ %23 $ & 2 3 4 5 6 7 8arrow_forward
- nt question Q1. Find the present value of 30 annual payments of $2,000 per annum where the first payment is made 14 years from now. So there are 30 annual payments from t=14 to t=43 inclusive. The discount rate is 5% pa. The present value of these payments is: Question 8Select one: a. $4,908.18 b. $16,304.68 c. $21,212.85 d. $30,282.15 e. $30,744.9arrow_forwardQuestion 20 You owe $26,000 on student loans at an interest rate of 3.6% compounded monthly. You want to pay off the loan in 15 years. You should show your work for this problem. nts What will your monthly payments be? How much interest do you pay? > Next Question mplete 31arrow_forwardChapter 5: Simple and Compound Interest - Homework Score: 50.42/100 18/32 answered • Question 19 > Suppose you invest $3300 in an account with an annual interest rate 12% compounded monthly (1% each month). Use this information to complete the table below. Round to the nearest cent as needed. 1% Interest Month Starting Balance Ending Balance on Starting Balance $3300 $33 $3333 2 $3333 3. $3399,99 4 $3399.99 $34.34 Submit Question 14 80 888 DD F2 F3 F4 F7 FB F9 @ 23 & 1 2 3 4 7 8 Q W E R T D F H このarrow_forward
- FIN2230 Chapter 9 Assignment i 4 If you invest $14,500 per period for the following number of periods is received at the beginning of each year. (Annuity in advance) (Use a Financial calculator to arrive at the answers. Round the final answers to the nearest whole dollar.) a. 9 years at 4 percent Future value $ b. 16 years at 12 percent Future value $ c. 20 periods at 15 percent Saved Future valuearrow_forwardpse Module 11: Interest and Annuities Suppose you make a lump-sum investment of $10,000 in an account earning 7% interest compounded monthly. How many years will it take for your investment to grow to $100,000? SHOW YOUR WORK IN STEPS. (Round your answer to the nearest tenth of a year.)arrow_forwardPicture Tools Format O Tell me what you want to do... Exercise 10. Loan Payments A student loan of $50,000 at a fixed APR of 6% for 20 years (10a) Calculate the monthly payment P x APR РMТ (-nY)1 1+ APR (10b) Determine the total amount paid over the term of the loan.arrow_forward
- ll.6 Please make sure to Data Analytics Project #3 completed before answering this question. Click on the "Loan" worksheet. The annual payment on the loan worksheet should be $14,168.37 per year and the monthly payment should be$1,169.67 per month. Which of the following statements is TRUE if we change the down payment to zero and APR (annual percentage rate) to 6.00%? O Both the annual payment and monthly payment will decrease. The annual payment will stay the same and the monthly payment will increase. O The annual payment will increase but the monthly payment will decrease. O Both the annual payment and monthly payment will both increase.arrow_forwardes of Finance | ZSpring20 spring21 Time left 1:25:4 If for the next 30 years you place OMR 3,610 in equal annual year-end-deposits into an account earning 11% per year, how much money will be in the account at the end of that time period? O a. OMR 797,496.56 O b. OMR 553,408.61 Oc OMR 34,836.90 Od. OMR 718,465.37 Oe OMR 31,384.59 CLEAR MY CHOICE NEXT PAGE CONTACT US P Type here to search %23 ort sc delete 8 - backspac G C V pause alt ctriarrow_forwardA 25 Q Search Saud borrowed $90,000 now. He will pay off the loan with 10 equal quarterly payments. The first payment will be on end of quarter 2. The interest rate is 12% compounded quarterly. What is the amount of the quarter payments? Answers: $ 15, 928.60 $ 11,193.29 $ 10,550.75 $ 12,001.63 NPOG 5292 28 MacBook Airarrow_forward
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