Suppose you lend $11,500 to a friend at an APR of 10.00%. Your friend will pay you back beginning next month with 60 monthly installments. You can reinvest the payments you receive in your money market account at an APR of 1.10%, calculated monthly. a. How much will your friend pay you each month? ______________ b. How much will you have in your account at the end of 60 months? (to nearest $___________________ c. What is your effective annual return (EAR), _._ _%?
Suppose you lend $11,500 to a friend at an APR of 10.00%. Your friend will pay you back beginning next month with 60 monthly installments. You can reinvest the payments you receive in your money market account at an APR of 1.10%, calculated monthly. a. How much will your friend pay you each month? ______________ b. How much will you have in your account at the end of 60 months? (to nearest $___________________ c. What is your effective annual return (EAR), _._ _%?
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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Suppose you lend
money market account at an APR of
$11,500
to a friend at an APR of
10.00%.
Your friend will pay you back beginning next month with
60
monthly installments. You can reinvest the payments you receive in your 1.10%,
calculated monthly. a. How much will your friend pay you each month? ______________
b. How much will you have in your account at the end of
60
months? (to nearest $___________________c. What is your effective annual return (EAR), _._ _%?______________
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