Question

38. Rita borrows $4,500 from the bank at 9 percent annually compounded interest to be repaid in three equal annual installments. The interest paid in the third year is_ A. $405.00 B. $147.00 C. $352.00 D. $277.95

can you solve these two, and please show the functions to input into a financial calculator. Also why is question 31. answer choice A and not C?

Answer 1

38)	Annual payment= [P x R x (1+R)^N]/[(1+R)^N-1]
	Where,
	EMI= Equal Monthly Payment
	P= Loan Amount
	R= Interest rate per period
	N= Number of periods
	= [ $4500x0.09 x (1+0.09)^3]/[(1+0.09)^3 -1]
	= [ $405( 1.09 )^3] / [(1.09 )^3 -1
	=$1777.7464
	Value of the loan at the end of 2nd year
	=$1777.75/(1.09)
	=$1630.96
	Interest for the thid year = $1631*0.09
	=$147
	Correct Option: B
31)	Future Value of an Annuity Due
	= C*[(1+i)^n-1]/i] * (1+i)
	Where,
	c= Cash Flow per period
	i = interest rate per period
	n=number of period
	10000= C[ (1+0.09)^5 -1 /0.09] * (1 +0.09)
	40000= C[ (1.09)^5 -1 /0.09] * 1.09
	= $C[ (1.5386 -1 /0.09] * 1.09
	C= $6131.83
	C= $6132
	Correct option: A