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- Q5-Mr. and Mrs. Lacks want to collect money for college expenses in a bank at 9% interest rate compounded monthly for their new-born daughter Henrietta. Mr. and Mrs Lacks transfer 7% and 5% of their salaries, respectively, to the savings account every month. Henrietta will go to college at her 18. Each year expense for the college is $40 000 for 5 years and the minimum accepted rate of return is 3%. Mr. Lacks expects to get raise once in every 2 years at about 8% of his salary. If monthly salary of Mrs. Lacks is $ 1500, how much money Mr. Lacks should make during the first 2 years to cover the 5-year college expenses? Ps. Raise will be applied in the first month at every second year. Yearly college expenses will be paid at the end of the year.)10. The compound interest on a certain sum of money at 25% for 3 years is Php 47,656.25. Its simple interest at the same rate and for the same period is Php Blank 1.Suppose you purchased a corporate bond with a 10-year maturity. a $1,000par value, a 10% coupon rate, and semiannual interest payments. What all this means that you receive $50 interest payment at the end of each six-month period for 10 years (20 times). Then, when the bond matures, you will receive the principal amount (the face value) in a lump sum. Three years after the bonds were purchased, the going rate of interest (coupon rate) on new bonds fell to 6% (or 6% compounded semiannually). What is the current market value (P) of the bond (3 years after the purchase)?
- (1) If an investment account gives 5% interest annually. How much equal annual deposits you have to make for 10 years starting year 1 to have a $240,408 at your account at the end of this investment.A person buys a piece of lot for P 100,000 down payment and 10 deferred semi-annual payments of P 8,000 each, starting three years from now. What is the present value of the investmentif the rate of interest is 12% compounded semi-annually? A. P 142,999.08 B. P 143,104.89 C. P 142,189.67 D. P 143,999.08An electronic device is available that will reduce this year’s labor cost by$16901.The equipment is expected to last for eight years. If labor cost increase at an average rate of 7% per year at interest rate is 12% compounded bimonthly. What is the maximum amount that we could justify spending for the device? Note: use formula and an interest rate with five decimal places.
- Suppose a certain manufacturer deposits $3, 000 at the beginning of each 3 month period for 8 years in an account paying 8% interest compounded quarterly. (Round your answers to the nearest cent.) (a) How much (in $) will be in the account at the end of the 8 year period? $ Incorrect: Your answer is incorrect. (b) What is the total amount (in $) of interest earned in this account? $ Incorrect: Your answer is incorrectSolve and draw the cash flow diagram An electronic device is available that will reduce this year’s labor cost by$15470.The equipment is expected to last for eight years. If labor cost increase at an average rate of 7% per year at interest rate is 12% compounded annually. What is the maximum amount that we could justify spending for the device? Interest rate should be rounded of by 5 decimal places and final answer to 2 decimal places Note: Do not use excel!A6 6.Compute the nominal interest rate of a continuously compounded loan if the effective interest rate is 25%? ANSWER= 11.80%
- SHOW SOLUTION If the effective interest rate is 24%, what nominal rate of interest is charged for a continuously compounded loan?You want to lend $1,000 as a bank deposit in a private bank with an APR: 48% per year compounded monthly (hint: what is the effective interest rate per month?) a. You plan to withdraw principle and interest as a lump sum (in one payment) at the end of 6 MONTHS . What is the value of the total payment? What is the total interest paid to you? b. You plan to withdraw principle and interest as a lump sum (in one payment) at the end of ONE YEAR . What is the value of the total payment? What is the total interest paid to you? write on excelLourdes has just retired and plans to consume $14965 from the retirement account every year for the next 10 years starting one year from today, meeting the rest of the expenses from other resources. If the annual interest rate is 9.6% compounded semiannually, how much does Lourdes have in the retirement account today? Round off interest rate to six decimal places.