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i2=7%
1
i3=9%
2
4. Which of the following incorrectly represents this cash flow, given i=10%.
$250
$150
i=10%
$150
$100
$100
5. Peter borrowed $20,000 from a bank to buy a car at an interest rate 9% compounded
monthly. This loan will be repaid in equal monthly installments over 4years. Immediately
after the 24th payment, Peter decided to pay the remainder of the loan in a single payment.
Compute the amount of the monthly payment, the final single payment, and the total amount
of interest that peter paid to the bank.
6. Find the present worth of the following cash flows given that the interest rate is 10%
compounded annually.
$500
$500
A=$400
4
10
12
14
16
18
20
$500
$50,000
$225,000
20 years
?
$35
10% of total initial investment