Question
a). What is the Effective Annual Rate (EAR) on a deposit account with a stated Annual Percentage Rate (APR) of 10% and monthly compounding? b).
a). What is the Effective Annual Rate (EAR) on a deposit account with a stated Annual Percentage Rate (APR) of 10% and monthly compounding?
b). You have $20,000 in the bank today. How much would you need to save each year in order to accumulate $3,000,000 in 34 years? Assume the interest rate is 9% and that the payments occur at the end of each year.
c). You want to buy a new house. You can afford to pay $13,000 per year for 30 years with the first payment being due at the end of year 1. If the interest rate on your loan is 3.9%, what price of home can you buy today?
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