Question

Derek decides to buy a new car. The dealership offers him a choice of paying $519.00 per month for 5 years (with the first payment due next month) or paying some $28,934.00 today. He can borrow money from his bank to buy the car. What interest rate makes him indifferent between the two options?

Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243))

Derek wants to withdraw $14,002.00 from his account 4.00 years from today and $13,467.00 from his account 10.00 years from today. He currently has $3,421.00 in the account. How much must he deposit each year for the next 10.0 years? Assume a 5.10% interest rate. His account must equal zero by year 10.0 but may be negative prior to that.

Answer format: Currency: Round to: 2 decimal places.

Derek currently has $13,029.00 in an account that pays 4.00%. He will withdraw $5,072.00 every other year beginning next year until he has taken 6.00 withdrawals. He will deposit $13029.0 every other year beginning two years from today until he has made 6.0 deposits. How much will be in the account 24.00 years from today?

Answer format: Currency: Round to: 2 decimal places.

Answer 1

1)

Hence, indifferent rate is 2.929% (0.24412%*12)