Homework Answers
Present worth = $38,000
Annual interest rate = 6%
Compounding interest rate = 6% / 12 = 0.5%
Number of compounding period = 12 * 5 years = 60
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payments. What is your monthly payment (calculated with the
equations on the next page)? Compare your answer to that obtained
with the built in function, PMT. Be sure to label all cells
appropriately. (There is no need to create a monthly payment table,
simply use the equations on the next page.)
Loans: where: and,...
1. Interest Periods and Compounding
a) Your family loans you money for school at a simple interest
rate of 5%. If the original amount they provided was $20,000 what
will you be paying them back in 5 years?
b) You have 10 acres of land that can be used for residential
development. It is worth $20,000 per acre right now. What would it
be worth in 6 years if it appreciates at a rate of 6% compounded
annually?
c) Which...
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