Question

What is effect of using the "EAR in the Annuity Formula," and what effect does it have on interest rates?

Answer #1

“How do you find the future value of an ordinary annuity
using the simple interest formula method?”

Using this formula, answer the following.
Consider an annuity consisting of three cash flows of $8,000
each. If the interest rate is 6%, what is the present value (today)
of the annuity if the first cash flow occurs:
Today
One year from today
Two years from today
Five years from today

Annuity Payment and EAR
You want to buy a car, and a local bank will lend you $30,000.
The loan would be fully amortized over 3 years (36 months), and the
nominal interest rate would be 6% with interest paid monthly. What
is the monthly loan payment? Do not round intermediate
calculations. Round your answer to the nearest cent.
$
What is the loan's EFF%? Round your answer to two decimal
places.
%

When comparing an annuity due to an ordinary annuity, an annuity
due:
will always have lower present values and higher future values
assuming equal payments, interest rates and terms.
will always have lower future values and higher present values
assuming equal payments, interest rates and terms.
will always have lower future values and lower present values
assuming equal payments, interest rates and terms.
will always have higher present values and higher future values
assuming equal payments, interest rates and terms....

1. Suppose that the reserve requirement is 10%.
a) Using the formula, what money multiplier would this
imply?
b) Why might the actual money multiplier be smaller,
particularly in a recession?
2. How does an expansion of the money supply affect interest
rates? How does a contraction in the money supply affect interest
rate?
3. The components of aggregate demand are C, I, G and X-M.
a. How is consumption affected by an increase in interest rates?
Why?
b. How...

Problem 4-8
Annuity Payment and EAR
You want to buy a car, and a local bank will lend you $10,000.
The loan would be fully amortized over 5 years (60 months), and the
nominal interest rate would be 10% with interest paid monthly. What
is the monthly loan payment? Do not round intermediate
calculations. Round your answer to the nearest cent.
$
What is the loan's EFF%? Round your answer to two decimal
places.
%

What is the law of effect? What effect does it have on
behavior?

11. What is the present value of a 10-year annuity with annual
payments of 50 and an interest rate of 5?
a. Do this
with your calculator, indicating what number you put in each
button.
b. Do this
in Excel, using the annuity formula.
12. What is
the present value of a cash flow of 1000 being paid in 10 years
with an interest rate of 5%?
13. What is
the sum of the calculations in (11) and (12)? What...

1a. What effect does FSH have on the testes?
1b. What effect does FSH have on the ovaries?
2. What is the main role of progesterone?
3a. What is the function of interstitial (Leydig's ) cells?
3b. What is the function of follicle cells?
4. What does semen contain?
5. Define ovulation.
6. Define implantation.
7. What does HCG do?
8. What do seminiferous tubules do?
9. What is the cervix?
10. Why does semen contain fructose

A 70%-owned subsidiary declares and pays a cash dividend. What
effect does the dividend have on retained earnings and
noncontrolling interest in the consolidated balance sheet?
Decrease in retained earnings and no effect on noncontrolling
interest.
No effect on retained earnings and a decrease in the
noncontrolling interest.
Decreases both retained earnings and noncontrolling
interest.
No effect on either retained earnings or the noncontrolling
interest.

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