2. Classify the type of annuity described in the following scenario. A student loan carrying interest of 2.5%, compounded quarterly is repaid with payments of $1000 at the end of every three months. Mr. Smith made 24 monthly deposits of $250 into an account that earns 8% compounded quarterly. How much will be in the account three years after his last deposit? a $6,522.87 b $7,021.41 $8,218.15 d $8,272.57 A $12,000 loan is repaid by semi-annual payments of $1,500 each. Interest on the loan is 10% compounded semi-annually. How long will it take to pay off the loan? с a 10 years b 5.5 years с 5 years d 21 years
2. Classify the type of annuity described in the following scenario. A student loan carrying interest of 2.5%, compounded quarterly is repaid with payments of $1000 at the end of every three months. Mr. Smith made 24 monthly deposits of $250 into an account that earns 8% compounded quarterly. How much will be in the account three years after his last deposit? a $6,522.87 b $7,021.41 $8,218.15 d $8,272.57 A $12,000 loan is repaid by semi-annual payments of $1,500 each. Interest on the loan is 10% compounded semi-annually. How long will it take to pay off the loan? с a 10 years b 5.5 years с 5 years d 21 years
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
Problem 1PS
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Transcribed Image Text:2. Classify the type of annuity described in the following scenario.
A student loan carrying interest of 2.5%, compounded quarterly is repaid with payments of $1000 at the end
of every three months.
Mr. Smith made 24 monthly deposits of $250 into an account that earns 8% compounded quarterly. How
much will be in the account three years after his last deposit?
a
$6,522.87
b
$7,021.41
$8,218.15
d
$8,272.57
A $12,000 loan is repaid by semi-annual payments of $1,500 each. Interest on the loan is 10%
compounded semi-annually. How long will it take to pay off the loan?
с
a
10 years
b
5.5 years
с
5 years
d
21 years
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