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.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

ChapterA: Appendix - Time Value Of Cash Flows: Compound Interest Concepts And Applications

Section: Chapter Questions

Problem 15E

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