1. Fifteen years ago, you put away $7,500. Today, that investment is now worth $22,068. What...
1. Fifteen years ago, you put away $7,500. Today, that investment is now worth $22,068. What is the average annual rate of return you earned on your investment?
2. Your company takes out a 10-year term loan to borrow $1,325,000 to finance a building expansion. The annual interest rate on the loan is 4.75% and equal payments are made monthly. How much will the monthly payment be?
3. Referring back to question #2, how much total interest will the company be paying over the life of the term loan?
Homework Answers
Ans 1) 7.46%
| FV = | Future Value |
| PV = | Present Value |
| r = | rate of interest |
| n= | no of period |
| FV/ PV = | (1 + r%)^n |
| 22068 / 7500 = | (1 + r%)^15 |
| 2.9424 = | (1 + r%)^15 |
| r = | 7.46% |
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