Help!! Present Value/Future Value/Annuities Problems?

Any help would be appreciated. I need to show work. I did 13 and 16. I'm not sure if 13 is right.

Chapter 05

13. You wish to borrow $12,000 to be repaid in monthly installments of $320 over 4 years. What is the annual interest rate?

PV=-12,000, P/Y=12, N=4, PMT=320.00, FV=0, CPT I/Y= 12.67

I used this to find interest per period and then multiplied that by 12: http://www.arachnoid.com/lutusp/finance.html

14. If you have $30,000 in an account earning 8% annually, what constant amount could you withdraw each year and have nothing remaining at the end of five years?

15. You borrowed $147,000 at 5.75% for 30 years with monthly payments to purchase a home in south Moorhead. The day your 38th payment clear your checking account, you receive a refinancing offer at 5.25% for a possible 30 year term. What is the amount of new loan if it is used to refinance the existing loan only?

16. If you invest $750 every six months at 8% compounded semi-annually, how much would you accumulate at the end of 10 years?

N=10X2=20, I/Y=8.0, P/Y=2, PV=0, PMT=750, CPT FV= 22,333.56

17. A commercial bank will loan you $7,500 for two years to buy a car. The loan must be repaid in 24 equal monthly payments. The annual interest rate on the loan is 12% of the unpaid balance. What is the amount of the monthly payments?

18. What is the effective interest rate (EAR or APY) of an investment with a stated rate (Nominal or Quoted Rate or APR) of 6% compounded quarterly?

19. What is the present value of $250 received at the beginning of each year for 21 years? Assume that the first payment is received today. Use a discount rate of 12%.

20. How much money must you pay into an account at the beginning of each of five years in order to have $5,000 at the end of the fifth year? Assume that the account pays 12% per year.

21. Given the following cash flows and respective timing, what is the total present value if the discount rate is 11% compounded annually? Assume year-end cash flows.

Year

Annual Year End Cash Flows

1

$300

2

$400

3

$000

4

$500

22. After examining the various personal loan rates available to you, you find that you can borrow funds from a finance company at 12% compounded monthly or from a bank at 13% compounded annually. Which alternative is more attractive?

Compare Effective Annual Rates (EAR) or Annual Percentage Yield (APY)

23. You plan to retire at the end of ten years. You want to have a fund at that time that will allow you to draw out nine annual payments of $100,000 beginning at the end of the first year of retirement. You can make 9% annually on the fund at all times. What is the amount of ten equal annual payments you must put into the fund (the last payment on the date of retirement) if you want to accomplish your goal?

24. The house you want to buy costs $167,800. You plan to make a cash down payment of 10% and finance the balance over 20 years at 7.25% with monthly payments. What are principal and interest components of your 120th payment and outstanding loan balance after that payment?

25. Mr. Ace Investor has $10,000 to invest for one year. He has three investment alternatives: (1) earn 8 percent, compounded annually, (2) earn interest compounded quarterly, and (3) earn interest compounded monthly. What must the nominal interest rates be on the second and third options to make all the investments earn the same yield?

Update:

I got #17. Any website with the ability to do financial calculation stuff is also a great help

Update 2:

I have 16- 20. I need help with 14, 15 and 21-25

2 Answers

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  • Don G
    Lv 7
    9 years ago
    Favorite Answer

    Your answer to #13 and # 16 are correct, so you must have mastered the use of a financial calculator.

    The answer to # 17 is $353.05. BTW, interest is always based on the unpaid balance.

    Just remember to always clear the TVM Register before starting a new problem. And remember that one amount, either when entered, or as the answer, must be expressed as a negative. I always enter the PV as a negative, by entering the amount, then pressing the +/- key. (Don't enter the amount using the negative , or "subtract" key)

    Also be careful when changing to BGN (Beginning of Period) for an Annuity Due problem. Always return to END when finished, to prevent incorrect answers with Ordinary Annuity problems, the most common type.

  • Anonymous
    4 years ago

    Arachnoid Financial Calculator

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