Question

In this question, annual interest rates will be depicted as 0.08 for 8%, therefore when dividing an annual interest rate by 12, to get the per period rate, take it to four significant digits, e.g. 0.08/12 = 0.0067.





With interest rates at 0.0740, a person expects to earn $116932 after one year with a $99314 investment.
What is the profit of the investment at the end of the year?





A one year $10,000 T-Bill will sell for how much when issued when rates are 0.0740?




An investment of $12665 will bring cash flows of $2215, $7442, and $9788 at the end of the first three years.
If interest rates are 0.0740, what is the net present value of the investment?

Use the following formula or your calculator for the following questions:





You decide that you can afford a monthly mortage payment of $2000.00. For a 30 year loan with interest rates at 0.0740,
What is the maximum amount you can borrow on a house?




After 110 monthly payments of $2000.00,
how much do you still owe?

Answer 1

Question 1) With an interest of 0.074 per year,

the amount of $99314 will become

99314*1.074 = $106663.24

The amount that will be received from the investment = $116932

So, the profit from the investment =

= $116932 - $106663.24

= $10268.764

Question 2)The issue price for a $10000 T bill at the interest of 0.0740 =

= $10000 / (1+0.0740)

= 10000 / 1.074

= $9311 (rounded to nearest integer).

Question 3) The net present value =

= 2215*1.074-1 + 7442*1.074-2 + 9788*1.074-3

- 12665

= $3750.17.

PLEASE SEND THE OTHER QUESTIONS SEPARATELY.