You want to open a savings account and you have 3 choices: 1) a saving account that pays interest of 7.2% compounded quarterly (In other words, it offers an APR=7.2%, compounded quarterly), 2) a saving account that pays interest of 6.8% compounded monthly, and 3) a saving account that pays interest of 7% continuously compounded?  Which one do you prefer?

Q: Suppose your credit card issuer states that it charges a 24.00% nominal annual rate, but you must…

A: Effective Annual Rate(EAR) = [(1+ nominal rate/n)^n]-1 where, n = compounding period

Q: Assume that you will be opening a savings account today by depositing $125,000. The savings account…

A: Note: Since it is not mentioned that whether withdrawals are made annually or quarterly, so we will…

Q: A bank offers all savings accounts 5% interest compounded annually. If one account has a principal…

A: An account doubles when the present value becomes 2 times of itself. In order to become two times,…

Q: How much would you have to deposit at the end of the year in an account that pays an interest rate…

A: Monthly Deposit: It is the deposit made by the person over the period to accumulate a sum of money.…

Q: Use the PMT function in Excel to compute the monthly payment on a car each month if you borrowed…

A: Monthly payments is the annuity for given present value, interest rate and time period. Monthly…

Q: Which is better for the depositor: an account that yields 15% compounded monthly or 16% compounded…

A: Option 1 = 15% compounded monthly Option 2 = 16% Annually

Q: You have credit card debt of $25,000 that has an APR (monthly compounding) of 18%. Each month you…

A: The Annual Percentage rate (APR) is the percentage rate that shows the interest rate calculates on…

Q: NAB offers a car loan that will require you to pay 8% per annum, compounded weekly. Which of the…

A: Effective annual rate is the equivalent rate in comparison with the interest rate that is compounded…

Q: Use the PMT function in Excel to compute the monthly payment on a home each month if you borrowed…

A: Monthly payments refers to the amount which is paid on the periodic basis. The period of monthly…

Q: Today, you borrowed $3,200 on a credit card that charges an interest rate of 12.9 percent,…

A: We use NPER function to calculate monthly payments (in financial calculator and excel)

Q: Suppose you owe $1,100 on your credit card. The annual percentage rate (APR) is 18%, compounded…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: Use PMT= to determine the regular payment amount, rounded to the nearest dollar. Your credit card…

A: The PMT function is a type of financial function which helps to determine the total payment…

Q: Would you rather have a savings account that pays 5% interest compounded semiannually or one that…

A: Let assume $1000 invested for 1 years

Q: Suppose a person has a total credit card debt of $1.375 that has a 12% yearly interest rate. This…

A: Interest rate on savings provides the earnings to the investors while interest rate on credit card…

Q: ut an $8,000 car loan that calls for 7 annual payments of $2,400 each.  What is the interest rate?

A: Annual payments are made for payment of loan which carry the interest and payment of principal…

Q: You have $1000 in an account earning 4% APR compounded daily.  At the same time, you are to pay a…

A: Interest rate compounded daily is 4% Amount in account(PV) is $1000 Amount needs to pay in future…

Q: use excel to answer You have two options for paying your home insurance: 1) Pay $11,000 annually at…

A: The internal rate of return: The internal rate of return can be thought of as the interest rate…

Q: Consider a credit card with a balance of $7000. You wish to pay off the credit card in each…

A: Credit balance = $7,000 There are 2 interest rates and time duration  1. APR is 17.99% and time is 1…

Q: Friendly's Quick Loans, Inc., offers you "$4.30 for $5.30 or I knock on your door." This means you…

A: APR = [ ( Interest amount / Loan Amount ) * 365 / Frequency ] EAR = [ 1 + APR / 52 ]52 - 1

Q: You have been making monthly deposits of $35 into a savings account with monthly compounding for 4…

A: To calculate the APR compounded monthly from APY, this formula is used. APR = ((1+APY)1/12 -1)*12…

Q: How much money (to the nearest dollar) will you need to deposit in an account now in order to have…

A: Present value is the sum of the current value of money of future cash flows. It is also known as a…

Q: You have an account with a $1000 credit limit that charges 12.25% interest using the average daily…

A: In credit cards they are charged based on the daily balance and there is need of daily balance and…

Q: ou have monthly interest rate of 1.65% and a balance on your credit card of 2000.00. If you paid the…

A: To determine the interest amount and percentage that goes towards reducing principle.  The amount of…

Q: magine you have a credit card balance of $1,000 that you would like to pay off within one year. The…

A: The credits cards are settled on the monthly payments and are paid by monthly payments and these…

Q: A customer of your bank comes for a car loan 10000 OMR. He is charged with an interest rate of 5%…

A: Formulas:

Q: You want to buy a car and therefore you need $10,000. You can borrow from a bank today for 6 years.…

A: Purchase Price of Car = 10,000 Time Period (N) = 6 years i.e. 72 months Down Payment = 10% Loan =…

Q: effective interest rate

A: Formula: effective interest rate= [1+ interest rate/period)^ period]-1 *100

Q: You are looking at two savings accounts. One pays 5.25%, with daily compounding. The other pays 5.3%…

A: Effective Annual Interest Rate means the real rate of return on interest-paying instruments or…

Q: a. How much will you pay each month? How does this compare with the credit-card payment each mont?…

A: Loan amount (P) = $6100 Interest rate (r) = 11.5% n = Payment frequency = 12 (r/n) = 0.95833% t = 6…

Q: 1. What is your monthly payment if you choose 0% financing for 48 months? Round to the nearest…

A: Loan amortization refers to a schedule which is prepared to shows the periodic loan payments, amount…

Q: which of the following banks would you choose for a savings account based on the following rates…

A: Banks provide interest on deposited amount at fixed rate. Higher the rate, higher will be the…

Q: Suppose you deposit $10 every week into an account that earns 4% interest compounded weekly.  How…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: vings account may allow the owner to withdraw ₱30,000 semi-annually for 3 years starting at the end…

A: In this we need to calculate the present value of money.

Q: Which is better for the depositor: an account that yields 15% compounded monthly or 12% compounded…

A: Option-1 - 15% Compounding monthly Option-2 - 12% Compounding annually

Q: You have taken out a loan of $17,000 for 4 years with an interest rate of 3% compounded annually.…

A: The given problem can be solved using PMT function in excel. PMT function computes installment…

Q: You have credit card debt of $25,000 that has an APR (monthly compounding) of 18%. Each month you…

A: APR of old card = 18% APR of New Card = 9% Number of months in year = 12   (i) Monthly Interest rate…

Q: Suppose that you borrow $10,000 for four years at 8% toward the purchase of a car. Use PMT to find…

A: given, p = 10000 n = 12 r =8% t= 4 pmt=p×rn1-1+rn-nt=10000×8%121-1+8%12-12×4=$244.14 MONTHLY PAYMENT…

Q: You’re prepared to make monthly payments of $190, beginning at the end of this month, into an…

A: NPER is the number of payments required to make to have an account balance 10,000 in future. Given:…

Q: ordinary annuity that earns 7.3% compounded monthly has a current balance of $600,000. The owner of…

A: We will apply the required formula for all 3 monthly payments and will calculate the number of…

Q: You are negotiating a loan with a bank officer. The loan is at a moderate interest rate, and the…

A: given, term of loan = 6 months

Q: A bank offers two alternative interest schedules for a savings account of $100,000 locked in for 3…

A: Annual rate = 12% Monthly rate (r) = 1% Number of compounding per year (m) = 12   As per formula…

Q: At the Central Furniture Company, customers who buy on credit pay an effective annual interest rate…

A: Credit refers to an agreement to purchase a good or service with the express promise to pay for it…

Q: You are considering getting a new credit card from Imperial Credit Union. The credit union has…

A: Annual rate of Interest is given as 17.70%. (compounding monthly)Monthly rate of interest (17.70/12)…

Q: You deposit $66000 into an account which pays 7% compounded monthly. You leave the money in the…

A: Deposit amount =$66,000 Rate of interest (i)=7%12=0.005833 Duration (n)=8*12=96 periods

Q: Which one of the following bank accounts will you choose for a savings account? Bank A: An account…

A: When choosing a bank account for savings we choose the bank that offers highest EFF.  EFF = (1 +…

Q: 1. You find an online savings account paying 2% interest per annum compounded monthly. In the…

A: Annuity refers to series of equalized payments that are either received at end or start of specific…

Q: You put $1,000 into a savings account today that offers a 5% APR with semi-annual compounding (i.e.,…

A: Effective annualized rate informs the rate effectively (considering the impact of compounding…

Q: u have credit card debt of $25,000 that has an APR (monthly compounding) of 15%. Each month you pay…

A: Credit card there are monthly interest and monthly payment that are to be paid each month. All…