Question
1. You lend Jack $8,000 and he agrees to repay you in equal year-end amounts over 2 years. If the interest rate is 11.2% per
1. You lend Jack $8,000 and he agrees to repay you in equal year-end amounts over 2 years. If the interest rate is 11.2% per annum compounded quarterly, the annual repayment will be (rounded to nearest dollar; dont include the $ sign or commas):
2. You deposit 6,000 into your bank account every month starting in one month. You earn an interest rate of 6.9% p.a. compounded quarterly. How much will in your account after 5 years? (Correct your answer to the nearest cent without any unit (Do not put $ in front of your answer.). Do not use "," in your answer. e.g. 123456.78)
3. Which of the following is CORRECT? When discounting an amount to be received in one year's time at a rate that is quoted as 12% compounding monthly, we can:
Select one:
A. Discount the amount using an effective monthly rate of 1% where the number of periods is 12.
B. Discount the amount using an effective annual rate (EAR) of 12.6825% where number of periods is 1.
C. Discount the amount using the annual rate of 12% where number of periods is 1.
D. Both A and B above are acceptable.
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