Question

Question 47

To start a new business, Wima intends to borrow $22,700 from a local bank. If the bank asks her to repay the loan in 7 equal annual instalments of $5,132.72.

Determine the bank’s effective annual interest rate on the loan transaction. With annual compounding, what nominal rate would the bank quote for this loan? (Round answer to 0 decimal places, e.g. 15%.)

Effective annual interest rate			%
Nominal rate

Testbank, Question 73

Josh Ackerman, having saved up a nest egg of $1.5 million, retires this year and looks forward to a 30-year retirement. If his nest egg is expected to earn 9% APR and is compounded monthly, what will be his monthly income during retirement?

$50,000.00

$17,205.12

$14,600.45

$12,069.34

Answer 1

Ques- 73)

Present Value of nest egg for retirement = $ 1,500,000

Calculating the monthly income during retirement from nest egg using the Present Value of Ordinary nanuity:

Where, C= Periodic Payments

r = Periodic Interest rate = 0.09/12 = 0.0075

n= no of periods = 30 years*12 months = 360

Present value = $ 1500,000

C = $ 12069.34

So, monthly income during retirement is $ 12069.34. Hence, OPTION D

NOTE- AS HOMEWORKLIB Guidelines, I'm not allowed to answer more than 1 question per answer.

If you need any clarification, you can ask in comments.

If you like my answer, then please up-vote as it will be motivating