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1. Find the value, in 12 years' time, of 3400 invested at 4% interest compounded annually. ( 2 marks) 2. A bank offers a return
1. Find the value, in 12 years' time, of 3400 invested at 4% interest compounded annually. ( 2 marks) 2. A bank offers a return of 5% interest compounded annually. Find the future value of a principal of 4800 after 7 years. What is the overall percentage rise over this period? ( 2 marks) 3. A department store has its own credit card facilities, for which it charges interest at a rate of 2.5% each month. Explain briefly why this is not the same as an annual rate of 30%. What is the annual percentage rate? ( 2 marks) 4. Find the present value of 275000 which is due in ten years if the interest rate is 4% per year compounded annually. ( 2 marks) 5. If $1,200 is borrowed for half a year at a simple interest rate of 8% per year, what amount must be repaid at the end of the half-year? (2 marks) 6. Suppose that you will receive annual payments of $11,000 for a period of 10 years. The first payment will be made 4 years from now. If the interest rate is 6%, what is the present value of this stream of payments? ( 10 marks)
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