Problem 2 If a loan is taken with total annual payments of $10,000/year for 10 years,...
Problem 2 An investment is under consideration. If the total annual payments to the investment of $10,000/year is made uniformly over the year and for 10 years, compare the accumulated interest of the investment at the end of the 10 years if the payments are (1) made at the end of each year with discrete yearly interest compounding, (2) made at the end of each week with weekly discrete compounded interest and (3) made continuously with continuous interest compounding. The...
Problem 3 A) Pierluigi is trying to get a loan for $10,000 to start a business as a financial advisor and is trying to decide between several options. (15 points) i) A $10,000 loan that needs to be paid back after 5 years with a 5% nominal annual interest rate, compounded monthly interest ) A $10,000 loan that needs to be paid back after 6 years, the first 2 years there is no and after the annual effective interest rate...
Problem 3 B) Pierluigi is trying to get a loan for $10,000 to start a business as a financial advisor and is trying to decide between several options. (15 points) DA $10,000 loan that needs to be paid back in 6 years with a 6 % nominal annual interest rate, compounded monthly i) A $10,000 loan that needs to be paid back in 7 years, which accrues no interest during the first 2 years but has a 10% effective interest...
A car loan is taken for $13,000 to be paid back in 5 years, with monthly payments of $495. What nominal annual interest rate is being charged in this loan? 1) 27.42% 2) 42.26% 3) 39.00% 4) 2.29%
Prepare a table showing ten years of payments on a 10-year loan of $1,000,000 at annual interest = 5%. Include all information shown on the following sample table. Year Loan Payment Loan Interest Principal Payment Balance remaining 0 1,000,000 1 2 Revise the table with a new calculation that results from an extra payment of $200,000 at the end of year 3.
(a) Payments of RM 100 are made continuously throughout the year for 8 years and interest is credited at a constant force of interest, 8, of 5%. Calculate the future value of these payments at the end of 8 years. (b) Now assume a payment of RM 100 is made continuously throughout the first year, a payment of RM 200 is made continuously throughout the second year, and so on until a payment of RM 800 is made continuously throughout...
A 10-year loan in the amount of $238,000 is to be repaid in equal annual payments. The interest rate is 7 percent, compounded annually. What is the amount of interest that is included in the loan payment for Year 3? PLEASE HELP WITH EXCEL FUNCTION
a. For an interest rate of 100% per year compounded continuously, calculate the effective daily, weekly, monthly, quarterly, semiannually, and annually interest rates. b. An investor requires an effective return of at least 12% per year. What is the minimum annual nominal rate that is acceptable for continuous compounding?
Consider introducing compound interest to the pricing formulas for perpetuities and annuities. Suppose each annual payment C is paid in n installments, spread equally over each year, and let r denote the nominal annual interest rate. (a) (10) Show that the present value of a perpetuity does not depend on the number of compounding periods. (b) (10) Show that the present value of an annuity is increasing in the number of compounding periods. What if the payments are made continuously...
d0. What is the nominal annual rate of interest compounded quarterly if a loan of $21,500 is paid in seven years by payments of $2,000 made at the end of every six months?