Part 1: Natasha purchases a payout annuity on 1/1/2023 with 120 payments; $50 monthly payments made at the end of each month for 24 months and $100 for the remaining 96 months with a 4% annual nominal rate convertible monthly. The first payment is 1/31/23. Calculate the present value at purchase 1/1/2023, i.e., time zero. Round your answer to the nearest integer. Part 2: If the purchase price were $9,000, what would the nominal interest rate be compounded monthly (round to nearest 0.01%) ? Draw a line diagram that can be used to solve the Part 1 and Part 2 problems.
Part 1: Natasha purchases a payout annuity on 1/1/2023 with 120 payments; $50 monthly payments made at the end of each month for 24 months and $100 for the remaining 96 months with a 4% annual nominal rate convertible monthly. The first payment is 1/31/23. Calculate the present value at purchase 1/1/2023, i.e., time zero. Round your answer to the nearest integer. Part 2: If the purchase price were $9,000, what would the nominal interest rate be compounded monthly (round to nearest 0.01%) ? Draw a line diagram that can be used to solve the Part 1 and Part 2 problems.
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:Part 1: Natasha purchases a payout annuity on 1/1/2023 with 120 payments; $50 monthly payments
made at the end of each month for 24 months and $100 for the remaining 96 months with a 4% annual
nominal rate convertible monthly. The first payment is 1/31/23. Calculate the present value at purchase
1/1/2023, i.e., time zero. Round your answer to the nearest integer.
Part 2: If the purchase price were $9,000, what would the nominal interest rate be compounded
monthly (round to nearest 0.01%) ?
Draw a line diagram that can be used to solve the Part 1 and Part 2 problems.
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