2 dp

a) P = $54,000

R% = 3.5% effective

We need to find the nominal rate

Nominal rate = (1+Effective rate)^(1/k) - 1 - 100k

where K is number of compoundings in a year

Nominal Rate = (1+3.5%)^(1/4) - 1 - 100*4

Nominal Rate = (1+3.5%)^(1/4) - 1 - 100*4

Nominal rte = 3.45%

T = 5 years

Quarterly repayment can be calculated in excel using the formula as below:

=PMT (Effective Rate per installment, Number of installments, Principal)

=PMT (R/4, T*4 , -P)

=PMT (3.45%/4, 5*4 , -54000)

=PMT (0.8637%, 20, -54000)

= $2,951.54

B) The amortization table is as below for the first year:

	[A]	[B] = [A] * 3.94% /4	[C] = [A] + [B]	[D]	[E] = [C] - [D]
	Opening balance	Interest	Total outstanding	Payment	Closing balance
1	54,000.00	466.42	54,466.42	2,951.54	51,514.88
2	51,514.88	444.96	51,959.84	2,951.54	49,008.30
3	49,008.30	423.31	49,431.61	2,951.54	46,480.07
4	46,480.07	401.47	46,881.54	2,951.54	43,930.01

So, after one year, he owes $43,930.01

c) As per above amortization table, total interest paid in 1st year = $466.42 + $444.96 + $423.31 + $401.47

= $1,736.15

d) Assuming that every year, there are 52 weeks.

Now, assuming r to be the required rate of interest,

P= $54,000

PMT = $273.44219239871

N = 5 years * 52 weeks = 260 weeks

We can use excel formula as below to find the weekly rate of interest:

=Rate (Number of cash flows, Weekly cash flow, Principal, Future value, beginning/end of period)

=Rate (N,PMT,-P,0,0)

=Rate (260, 273.44219239871, -54,000,0,0)

=0.2215%

To find out annual rate, multiply 0.22% with 52

Annual rate = 0.2215% * 52 = 11.52%

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cel Assignment d Gillian has entered the agreement with Geoffrey described above. She estimates that the costs of the delivery services she has promised to Geoff rey (petrol, Insurance, wear and tear, etc) amount to $1125.0825609389 per month in advance for the coming 5 years. (a) If Gillian can borrow/invest money at a rate of 3% p.a. effective, what is the equivalent amount today of her future liabilities? Note that this calculation should not involve the payment she receives from Geoffrey today Answer: 10 (b) The money she receives from Geoffrey can be considered a loan, with repayments being the value of the services she provides in return. What is the interest rate, expressed as an effective annual rate, she is being charged on this "loan"? aved ut of Answer: Save and review ACST1001 Finance 1A My home / My units / ACST1001_SHFYR_2020_ALL_U 7 Week 8 Bonds (Topic 7) / Excel Assignment Question 9 Not yet saved Gillian has entered the agreement with Geoffrey described above. She estimates that the costs of the delivery services she has promised to Geoffrey (petrol, insuran wear and tear, etc) amount to $1125.0825609389 per month in advance for the coming 5 years. (a) If Gillian can borrow/invest money at a rate of 3% p.a. effective, what is the equivalent amount today of her future liabilities? Note that this calculation should not involve the payment she receives from Geoffrey today. Marked out of 1.00 P Flag question Answer: Question 10 Not yet saved (b) The money she receives from Geoffrey can be considered a loan, with repayments being the value of the services she provides in return. What is the interest rate, expressed as an effective annual rate, she is being charged on this "loan? ers Marked out of 2.00 rinciples 31 Answer: : P Flag question inance 1A Principles ment Save and review Previous page Business 12 Academic 02 atics 2 General Learn 001 Research ersity Studies Students Learn or IT question? help.ma Learn info Library L&T Wor Teach Los Learn Quick Guides for students General question? ask.ma IT Information printing, Lab, technologies) 0001 mting cel Assignment d Gillian has entered the agreement with Geoffrey described above. She estimates that the costs of the delivery services she has promised to Geoff rey (petrol, Insurance, wear and tear, etc) amount to $1125.0825609389 per month in advance for the coming 5 years. (a) If Gillian can borrow/invest money at a rate of 3% p.a. effective, what is the equivalent amount today of her future liabilities? Note that this calculation should not involve the payment she receives from Geoffrey today Answer: 10 (b) The money she receives from Geoffrey can be considered a loan, with repayments being the value of the services she provides in return. What is the interest rate, expressed as an effective annual rate, she is being charged on this "loan"? aved ut of Answer: Save and review