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- 1. Jessica buys a television set from a merchant who asks P14,000.00 at the end of 80 days. She wishes to pay the merchant immediately and the money assumed 10% of simple interest. What is the cash price today? Draw the cash flow diagram. 2.How long does it takes a principal of P25,000 at a simple interest rate of 5% per year to become P30,000? Draw the cash flow diagram. 3. Determine the ordinary and exact simple interest on $5,000 for the period from January 15 to June 20,2015 if the rate of simple interest is 14% 4. 13. What payment X 10 years from now is equivalent to a payment of P500,000 7 years from now, if interest rate is 12% compounded semi-annually? 5. A factory operator bought a diesel generator set for P10,000 and agreed to pay the dealer uniform sum at the end of each year for five years at 8% compounded annually, that the payment will cancel the debt and principal interest. What is the annual payment?Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,600 is set aside each year and invested in a savings account that pays 8% interest per year, compounded continuously. a. Determine the accumulated savings in this account at the end of 23 years. b. In Part (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 23. The annuity will extend from the EOY 24 to the EOY 32. What is the value of this annuity if the interest rate and compounding frequency in Part (a) do not change?5. You borrowed $21,061.82 to finance the educational expenses for your senior year of college. The loan will be paid off over five years. The loan carries an interest rate of 6% per year and is to be repaid in equal annual installments over the next five years. Assume that the money was borrowed at the beginning of your senior year and that the first installment will be due a year later. Compute the amount of the annual installments.
- Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,600 is set aside each year and invested in a savings account that pays 10% interest per year, compounded continuously. a. Determine the accumulated savings in this account at the end of 23 years. b. In Part (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 23. The annuity will extend from the EOY 24 to the EOY 33. What is the value of this annuity if the interest rate and compounding frequency in Part (a) do not change? The accumulated savings amount at the end of 23 years will be $1. An entrepreneur needs thousand of dollars to launch the global expansion of his software business. I have agreed to lend him the money today (n=0) at an interest rate of 8% compounded quarterly. I required that the loan be repaid in eight annual payments starting at Year 4 with a $20K payment. Subsequent payments will decrease by $1K each year thereafter. (1) What is the present value of the money being borrowed? (2) Convert your Present Value to Annual Payment.Many persons prepare for retirement by making monthly contributions to a savings program. Suppose that $2,200 is set aside each year and invested in a savings account that pays 20% interest per year, compounded continuously. a. Determine the accumulated savings in this account at the end of 24 years. b. In Part (a), suppose that an annuity will be withdrawn from savings that have been accumulated at the EOY 24. The annuity will extend from the EOY 25 to the EOY 34. What is the value of this annuity if the interest rate and compounding frequency in Part (a) do not change? Click the icon to view the interest and annuity table for continuous compounding when /-20% per year. CODE a. The accumulated savings amount at the end of 24 years will be $ (Round to the nearest dollar.)
- An investor can invest money with a particular bank and earn a stated interest rate of 4.40%; however, interest will be compounded quarterly. What i are the nominal, periodic, and effective interest rates for this investment opportunity? Interest Rates Nominal rate Periodic rate Effective annual rate Rahul needs a loan and is speaking to several lending agencies about the interest rates they would charge and the terms they offer. He particularly likes his local bank because he is being offered a nominal rate of 4%. But the bank is compounding bimonthly (every two months). What is the effective interest rate that Rahul would pay for the loan? ○ 3.945% 4.152% 4.067% 04.186 % Another bank is also offering favorable terms, so Rahul decides to take a loan of $12,000 from this bank. He signs the loan contract at 5% comanded daily for 12 months. Based on a 365-day year, what is the total amount that Rahul owes the bank at the end of the loan's term? (Hint: To calculate the number of days,…(3) Suppose we invested $20,000 at an annual rate of 5% where interest is compounded continuously. (a) Write down an IVP that describes the amount of money y(t) that you will have in your account after t years. Then, solve the IVP and compute how much money you expect to have in your account after 10 years. (b) Now suppose you want to have $100,000 in your account after those 10 years. In order to accomplish that, you will make yearly deposits of D dollars. Find D, so that y(10) = $100,000. Note that we still have y(0) = $20,000.1. How many years will a deposit triple itself at an interest rate of 7% per annum compounded continuously? 2. A nominal annual rate of interest of 7%, compounded continuously, has an effective annual interest rate of_. 3. At what interest rate, compounded quarterly, will an investment double in 5 years? 4. A house and lot costing P2 Million was bought at a downpayment of P500,000 and P1 Million after one year. The remaining balance will be paid annually, what is the required payment? 5. Mr. Fernandez borrowed P25,000 due in 1 year and P75,000 due in 4 years. He agrees to pay P50,000 in 3year and the balance in 2 years. How much must he pay at the end of two years if money is worth 5% compounded continuously? 6. What is the nominal rate of interest compounded continuously for 8 years if the present worth factor is equal to 0.6187835. 7. If P 8000 is borrowed for 105 days at 12% per annum. How much will be due at the end of 105 days? 8. A man buys an electric fan from a merchant that…
- 8. Consider the cash flow transactions depicted in the accompanying cash flow diagram, with the changing interest rates specified. (a) What is the equivalent present worth? (In other words, how much do you have to deposit now so that you can withdraw $300 at the end of year 1, $300 at the end of year 2, $500 at the end of year 3, and $500 at the end of year 4?) (b) What is the single effective annual interest rate over four years? $300 $300 2 Years 9% 6% Interest Interest P compounded compounded $500 $500 6% Interest compounded( Solve the following problems. Draw the cash flow diagram for each problem and use the interest rate with five decimal places. Box your final answer and upload the picture of your complete solution. ) 1. An electronic device is available that will reduce this year’s labor cost by$10,000.The equipment is expected to last for eight years. If labor cost increase at an average rate of 7% per year at interest rate is 12% compounded bimonthly a. What is the maximum amount that we could justify spending for the device?b. What is the uniform annual equivalent value (A) of labor costs over the eight year period?QUESTION 3 1.1) Calculate the future value (rounded to the nearest whole number) of monthly deposits of R500, made for 30 years, at a nominal interest rate of 4% p.a. Then find the value of the monthly withdrawals (rounded to the nearest whole number) that can be made from this annuity for a period of 20 years, at a nominal interest rate of 5% p.a. Future value of monthly deposits = Monthly withdrawal =