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Annual effective interest rates for purchase

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Reference no: EM131541206

1. Draw the equivalent cash flow diagram and find the present value for the following cases:

a) $10,000 two years from now with an annual interest rate of 8%.

b) A series of 6 monthly payments starting at $100 at the end of the first month increasing by $25 every month with an annual interest rate of 6% compounded monthly.

c) A series of 8 monthly payments starting at $200 at the end of the first month and increasing by 3% every month with an annual interest rate of 4% compounded monthly.

2. You will receive $1,000 every quarter for the next 4 years that you will deposit into your bank. Your bank has guaranteed you an annual return of 2% compounded semi-annually for the first 2 years and 3% compounded monthly for the next 2 years. How much will be accumulated after 4 years?

3. Nissan is offering a Rogue for $18,588. This can be financed with a down payment of $2,008.80 and $249 per month for 72 months. What are the monthly, nominal, and annual effective interest rates for this purchase?

4. You are looking to buy a house for $250,000. You are offered an annual interest rate of 4.2% compounded monthly for 30 years. What are your monthly payments?

5. An engineering company has determined that $100,000 per year will be needed to maintain a new bridge. How much money is needed in a fund today to maintain the bridge indefinitely if the annual interest rate is 4.5%?

Reference no: EM131541206

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