11. Mr. and Mrs. Nash planned to make 16 identical yearly payments to fund the college education of their daughter, Susan. The estimated college expense is $34000 per year for the four years. The annual interest rate over the next few decades will be 14 percent. a) what are the yearly payments that have to be made to pay for the college? Alternatively, imagine that they planned to increase their payments at 6 percent per year. b) calculate the payment that must be made in the first year. c) what is the difference between the 2 payments?
11. Mr. and Mrs. Nash planned to make 16 identical yearly payments to fund the college education of their daughter, Susan. The estimated college expense is $34000 per year for the four years. The annual interest rate over the next few decades will be 14 percent. a) what are the yearly payments that have to be made to pay for the college? Alternatively, imagine that they planned to increase their payments at 6 percent per year. b) calculate the payment that must be made in the first year. c) what is the difference between the 2 payments?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:11. Mr. and Mrs. Nash planned to make 16 identical yearly payments to fund the college education of their daughter, Susan. The estimated college expense is $34000 per year for
the four years. The annual interest rate over the next few decades will be 14 percent.
a) what are the yearly payments that have to be made to pay for the college?
Alternatively, imagine that they planned to increase their payments at 6 percent per year. b) calculate the payment that must be made in the first year.
c) what is the difference between the 2 payments?
12. Mr. Peter takes out a mortgage of $50000 to buy a house. The mortgage will be paid over 20 years with interest paid quarterly. Given that the nominal interest rate is 15%,
a- what is the quarterly loan payment?
b- also calculate the remaining balance at the end of year 3.
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