Question

Ruby will receive 12 payments of $X every six months, beginning six months from today. If the present value of all 12 payments is $3670, find the payment amount $X, given an effective annual interest rate of 9%. Select one: a. $490 O b. $400 c. $275 OOO o d. $325 e. $530 O Today, Sohla made a $1200 investment, which will pay 15% annual interest. How much MORE money will she have after seven years, if she earns compound interest rather than simple interest? 0 Select one: a. $834 b. $780 oc. $653 O d. $732 O e. $700 Delany takes out a $500,000 loan to open a new bar. He will repay the loan in 200 monthly installments, beginning 1 month from now. If he pays equal amounts of principal every month, what will be his third payment? Assume an effective annual rate of 15%. Select one: a. $9,401 O b. $6,059 O c. $8,299 O d. $8,344 o e. $7,320 Rick makes an investment in which he pays $3000 today, and receives $6000 one year from today, in nominal terms. The NPV of this investment is $2,500. If inflation over the next year will be 3.5%, what is the real interest rate? Select one: O a. 5.4% b. 3.7% O c. 6.1% d. 4.8% e. 3.2% Oo

Answer 1

1)

Each cash flow, X PVA:([1-(1:(1+r)^n)]=r) Here, 8.8% =((1+9%)^(1/2)-1)*2 A Interest rate per annum B Number of years c Number of compoundings per per annum A:C Interest rate per period (r) BxC Number of periods (n) Present value (PVA) 2 4.4% 12 3,670.00 Each cash flow, X $ 400 3670:((1-(1:(1+4.4%)^12)):4.4%)

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