Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
70. What is the future value of a $500 annuity payment over eight years if interest rates are
14 percent?
71. Compute the present value of a $2,500 deposit in year 4 and another $10,000 deposit at
the end of year 8 if interest rates are 15 percent.
72. What is the present value of a $775 annuity payment over six years if interest rates are 11
percent?
73. What is the present value of a $1,100 payment made every year forever when interest
rates are 4.5 percent?
74. If the present value of an ordinary, 8-year annuity is $12,500 and interest rates are 9.1
percent, what is the present value of the same annuity due?
75. If the future value of an ordinary, 11-year annuity is $5,575 and interest rates are 5.5
percent, what is the future value of the same annuity due?
76. A loan is offered with monthly payments and a 14.5 percent APR. What is the loan's
effective annual rate (EAR)?
77. Given a 7 percent interest rate, compute the year 8 future value of deposits made in years
1, 2, 3, and 4 of $750, $1,200, $500, and $250.
78. Assume that you contribute $300 per month to a retirement plan for 25 years. Then you
are able to increase the contribution to $500 per month for 20 years. Given a 9 percent interest
rate, what is the value of your retirement plan after 45 years?
79. Given an 8 percent interest rate, compute the present value of payments made in years 1,
2, 3 and 4 of $900, $800, $700, and $600.
80. A small business owner visits his bank to ask for a loan. The owner states that she can
repay a loan at $2,500 per month for the next two years and then $3,000 per month for another
two years after that. If the bank is charging customers 6.5 percent APR, how much would it be
willing to lend the business owner?
81. A perpetuity pays $250 per year and interest rates are 8.5 percent. How much would its
value change if interest decreased to 5.5 percent? Did the value increase or decrease?
82. A perpetuity pays $250 per year and interest rates are 5.5 percent. How much would its
value change if interest increased to 8.5 percent? Did the value increase or decrease?
83. If you start making $115 monthly contributions today and continue them for six years,
what is their present value if the compounding rate is 12 percent APR? What is the present value
of this annuity?
84. Payday loans are very short-term loans that charge very high interest rates. You can
borrow $550 today and repay $675 in two weeks. What is the compounded annual rate implied by
this 22.73 percent rate charged for only two weeks?
85. What is the interest rate of a 6-year, annual $10,000 annuity with a present value of
$40,000?
86. What annual interest rate would you need to earn if you wanted a $1,250 per month
contribution to grow to $65,000 in three years?
87. You wish to buy a $30,000 car. The dealer offers you a 5-year loan with a 9 percent APR.
What are the monthly payments? What is the monthly payment if you paid interest only?
88. Isaac realizes that he charged too much on his credit card and has racked up $5,000 in
debt. If he can pay $225 each month and the card charges 17.55 percent APR (compounded
monthly), how long will it take him to pay off the credit card?
89. Isaac realizes that he charged too much on his credit card and has racked up $7,000 in
debt. If he can pay $275 each month and the card charges 17.55 percent APR (compounded
monthly), how long will it take him to pay off the credit card? How much interest expense will
Isaac pay during this time?
