Question

1) Celeste just borrowed 30,000 dollars. She plans to repay this loan by making equal quarterly payments of 2,458.16 dollars for 15 quarters. If she makes her first quarterly payment later today, then what is the quarterly interest rate on the loan? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

2) A trampoline park is worth 255,011 dollars. It is expected to produce equal monthly cash flows of 24,457 dollars for 10 months with the first monthly cash flow expected in 1 month. The trampoline park is also expected to make an extra cash flow of 19,141 dollars in 10 months. What is the monthly cost of capital for the trampoline park? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

3) Bryna wants to buy a car that is available at two dealerships. The price of the car is the same at both dealerships. Best Buggies would let her make quarterly payments of $2,240 for 5 years at a quarterly interest rate of 3.72 percent. Her first payment to Best Buggies would be due in 3 months. If California Cars would let her make equal monthly payments of $935 for 4 years and if her first payment to California Cars would be today, then what is the monthly interest rate that Bryna would be charged by California Cars? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

4) Mary Jo wants to buy a boat that is available at two dealerships. The price of the boat is the same at both dealerships. Middlefield Motors would let her make quarterly payments of 2,007.36 dollars for 12 years at a quarterly interest rate of 2.66 percent. Her first payment to Middlefield Motors would be due immediately. If Fairfax Boats would let her make equal monthly payments of 1,244.67 for 5 years and if her first payment to Fairfax Boats would be in 1 month, then what is the monthly interest rate that Mary Jo would be charged by Fairfax Boats? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Answer #1

1)use rate formulae in excel

=rate(nper,pmt,pv,fv,type)

=rate(15,-2458.16,30000,0,1)

=3.12%

answer is 0.0312

2)use irr function in excel and answer is 0.0058

Celeste just borrowed 31,500 dollars. She plans to repay this
loan by making equal quarterly payments of 1718.3 dollars for 24
quarters. If she makes her first quarterly payment later today,
then what is the quarterly interest rate on the loan?
Answer as a rate in decimal format so that 12.34% would be
entered as .1234 and 0.98% would be entered as .0098.

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dealerships. The price of the boat is the same at both dealerships.
Middlefield Motors would let her make quarterly payments of
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percent. Her first payment to Middlefield Motors would be due
immediately. If Fairfax Boats would let her make equal monthly
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this loan by making equal quarterly payments of 1,897.65 dollars
for 24 quarters. If she makes her first quarterly payment later
today, then what is the quarterly interest rate on the loan? Answer
as a rate in decimal format so that 12.34% would be entered as
.1234 and 0.98% would be entered as .0098.

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