2,5,6

Au 2. Periodic interest rates. You have a savings account in which you leave the funds for one year without adding to or withdrawing from the account. What would you rather have a daily compounded rate of 0.045%, a weekly compounded rate of 0.305%, a monthly compounded rate of 1.35%, a quar terly compounded rate of 4.15%, a semiannually compounded rate of 8.5% or an annually compounded rate of 17%? 3. EAR. What is the EAR of a mortgage that is advertised at 7.75% APR over the next twenty years and paid with monthly payments? 4. EAR. What is the EAR of a car loan that is advertised at 95% APR and paid with monthly payments? 5. Present value with periodic rates, Let's follow up with Sam Hinds, the dentist, and his remodeling project (Chapter 4. Problem 12). The cost of the equip- ment for the project is $18,000, and he will finance the purchase with a 75% loan over six years. Originally, the loan called for annual payments. Redo the payments based on quarterly payments (four per year) and monthly payments (twelve per year). Compare the annual cash outflows of the two payment plans Why does the monthly payment plan have less total cash outflow each year? 6. Present value with periodic rates. Cooley Landscaping needs to borrow $30,000 for a new front-end dirt loader. The bank is willing to loan the money at 8.5% interest for the next ten years with annual, semiannual, quar- terly, or monthly payments. What are the different payments that Cooley Landscaping could choose for these different payment plans? 7. Future value with periodic water