Question

You wish to borrow $**1,500** for 4 years to start
a business. You approach different lenders who have the following
offers. Which is the best lender to borrow from? All percentage
rates are rounded to 6 decimal places.

Select one:

a. 13.174622% pa APR compounding monthly where there are exactly 12 months per year.

b. 12.896686% pa APR compounding semi-annually where there are exactly 2 semi-annual periods per year.

c. 1.097885% as an effective monthly rate where there are exactly 12 months per year.

d. 0.252295% as an effective weekly rate where there are exactly 52 weeks per year.

e. I'll lend you the $**1,500** now if you pay me a
single payment of $2,533.44 in 4 years, with no other payments in
between.

Answer #1

You wish to borrow $2,000 for 2 years to start a business. You
approach different lenders who have the following offers. Which is
the best lender to borrow from? All percentage rates are rounded to
6 decimal places.
Select one: a. 11.345227% pa APR compounding weekly where there
are exactly 52 weeks per year.
b. 10.934509% pa APR compounding semi-annually where there are
exactly 2 semi-annual periods per year.
c. 0.218177% as an effective weekly rate where there are exactly...

You wish to borrow $2,000 for 2 years to start
a business. You approach different lenders who have the following
offers. Which is the best lender to borrow from? All percentage
rates are rounded to 6 decimal places.
Select one:
a. 13.067733% pa APR compounding monthly where there are exactly
12 months per year.
b. 13.319794% pa APR compounding quarterly where there are
exactly 4 quarters per year.
c. 1.097885% as an effective monthly rate where there are
exactly 12...

You wish to borrow $100,000. A lender quotes you an interest
rate of 6% per annum with continuous compounding. However, interest
is actually paid monthly. What is the dollar amount of interest
that you would have to pay on the $100,000 loan each month?

To buy a fancy sports car, you need to borrow $300,000 from a
bank. The bank will lend you the money for 5 years at an interest
of 12% per year. What will be your monthly payment to the bank?

National First Bank offers you a home loan for the next 30
years. The interest rate on the loan is 2.5% per annum. Required:
a. If the bank says that you need to pay $500 each week and the
interest rate is compounded weekly, what is the amount of your home
loan? b. What is your monthly payment if you wish to pay monthly
instalments and the interest rate is compounding monthly?

Question 2. You have approached Commonwealth Bank for a loan to
buy a house. The bank offers you a $500 000 loan, repayable in
equal monthly instalments at the end of each month for the next 30
years. Required: a. If the interest rate on the loan is 4.5% per
annum, compounded monthly, what is your monthly repayment (to the
nearest dollar)? b. What is your weekly payment if you wish to pay
weekly instalments and the interest rate is...

"You are opening an individual retirement account (IRA) that
earns 4% interest compounded daily. You wish to make monthly
deposits into the IRA. You also want to purchase a new car for
$25,000. You plan to set aside $790 every month, which will be
divided between your IRA and your car payment. You are considering
between two options:
OPTION 1: Make a down payment of $5,200 on the vehicle and borrow
$19,800 at an APR of 8%, compounded monthly for...

For 2 years, you deposit $45 per month in an account that earns
10% annually with monthly compounding. After the first five months,
you deposit a $500 lump sum. Six months after that (on month 11),
you deposit $1000 into your account. Eight months later (on month
19), you make a $750 deposit. You then move your money to an
account that has 3.5% monthly interest compounded weekly. You keep
it in this account for 3 years. After this time...

You have just sold your house for $1,000,000 in cash. Your
mortgage was originally a 30-year mortgage with monthly payments
and an initial balance of $800,000. The mortgage is currently
exactly 18½ years old, and you have just made a payment. If the
interest rate on the mortgage is 5.25% (APR), how much cash will
you have from the sale once you pay off the mortgage?
Sale
price
$
1,000,000
Initial balance
$
800,000
Number of years
30
Periods...

Question 1 : Your uncle offers to sell you his vintage Rolls
Royce. He suggests a payment plan where you pay just $13,000 today,
$7100 in 12 months and $69,000 in exactly 20 months from today. If
the interest rate is 12.8% per annum compounding monthly, what is
the value of the offer (in present day dollars, rounded to the
nearest dollar; don’t show $ sign or commas)?
is there anything not clear ?

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