Consider each of the equations below and draw the corresponding cash flow diagram. In each case, the interest rate is 10% per year compounded yearly. a. P = $1(P/F,10%,3) b. F= $1(F/P,10%,3) + $1(F/P,10%,5) - $1(F/A,10%,3) c. A = $1(P/F,10%,1)(A/P,10%,5)
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- Albert Einstein once noted that, "Compounding of interest is one of humanity's greatest inventions". To illustrate the mind-boggling effects of compounding, what amount should you invest quarterly for 10 years in a fund that earns 8% compounded quarterly, to be able to accumulate P1,000,000 10 years? Draw the cash-flow diagram before solving.Provide answers in the form of a percentage to three decimal places . (a).What is the effective annual interest rate of a 4 % nominal annual interest rate compounded daily . (b).What is the effective annual interest rate of a 2 % nominal annual interest rate compounded weekly ? (c).What is the effective annual interest rate of a 7 % nominal annual interest rate quarterly ?how much did you deposit at the end of each month in an IRA that pays 7% compounded monthly to earn $70,000 per year from interest alone, while leaving the principal untouched, to be withdrawn at the end of each year after you retire in 30 years?
- If Phil borrows $25,000 from a loan company at an interest rate of 3.5% per year compounded weekly, and plans to make a payment of $850 per quarter, how may years will it take him to pay off the loan?If Phil borrows $25,000 from a loan company at an interest rate of 3.5% per year compounded weekly, and plans to make a payment of $850 per quarter, how may years will it take him to pay off the loan?Sam promises to pay Sandy $2,000 in four years and another $3,000 four years later for a loan of $2,000 from Sandy today. What is the interest rate that Sandy is getting? Assume interest is compounded monthly.The CEO of a company is to give each nominal interest of his 50 employees a bonus. How much is needed to invest monthly for a year at 12% nominal interest rate compounded monthly so that each employee will receive 1,000 dollors bonus?
- Which is the better investment, a fund that pays 5% compounded annually or one that pays 4.8% compounded continuously?In one instance, a financial institution loaned you $60,000 for two years at an APR of 5.75% for which you must make monthly payments. In a second instance, you loaned a financial institution $60,000 for two years at an APR of 5.75% compounded monthly. What is the difference in the amount of interest paid? (Round your answer to the nearest cent.)A businessman borrowed P 200,000 and agrees to pay P 47,720 annually for x years at the rate of 6% compounded continuously. Find the value of x.
- INSTRUCTIONS: Solve for the following and draw the cashflow diagram. A. If you borrowed P10,000.00 from a bank with 18% compounded interest per annum, what is the total amount to be repaid at the end of 5 years? B. How long will it take for an investment to double its amount if invested at an interest rate of 6% compounded bimonthly?First City Bank pays 9 percent simple interest on its savings account balances, whereas Second City Bank pays 9 percent interest compounded annually If you made a deposit of $7,500 in each bank, how much more money would you earn from your Second City Bank account at the end of eight years?Steve promises to pay Amanda $2,000 in four years and another $3,000 four years later for a loan of $2,000 from Sandy today. What is the interest rate that Sandy is getting? Assume interest is compounded monthly.
