Question
A. Suppose you deposit $116 today, $135 in one year, and $885 in two years in an account that pays an annual rate of interest
A. Suppose you deposit $116 today, $135 in one year, and $885 in two years in an account that pays an annual rate of interest of 14.1%. How much money will be in the account after three years?
B.Suppose you signed a contract for a special assignment over the next 6 years. You will be paid $11492 at the end of each year. If your required rate of return is 11%, what is this contract worth in today?
C. You need a loan to purchase new equipment. The loan will be paid off over 8 years with payments made at the end of every quarter. If the stated annual rate is 12% and quarterly payments are 336, what is the loan amount?
D. What is the most that you would pay for an investment that promises to pay $20075 a year forever with the first payment starting one year from now? Assume that your required rate of return for this investment is 24.1%.
E. A loan has a stated annual rate of 17.9%. If loan payments are made monthly and interest is compounded monthly, what is the effective annual rate of interest?
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