Find the effective annual rate of interest (as a %, 2 decimal places) at which an amount of $2,000 today will accumulate to $6100 in 8 years. (Solve using excel =RATE function; Answer in percentage rounded to two decimals without the % sign e.g. 1.8891 is 1.89)

Jane wants to buy a house and approaches the bank to borrow $687,000. The bank agrees to lend her the money and quotes a monthly repayment amount of $7,000 with no additional loan fees. If the banks quoted annual interest rate is 5%p.a compounding monthly calculate the number of full month-end repayments using Excel. (answer by rounding down to whole number eg 50).

What does the cell reference A10:A14 mean?

Select one:

a.

It refers to a range of cells located in column A rows 10 to 14 (inclusive).

b.

It refers to two cells located in column A, namely A10 and A14.

c.

It refers to a range of cells located in row A, columns 10 to 14 (inclusive).

d.

It refers to a range of cells located in column A rows 1 to 10 and 10 to 14 (inclusive).

A debt of $16,000 with interest at 8.2%p.a compounding quarterly is to be repaid with 10 equal end-of-quarter payments.

How much interest is in the final instalment?

(Hint use excel: You can either:

- First calculate the loan outstanding at the beginning of the last quarter. The interest can then be calculated as if you were setting up a loan repayment schedule for the final quarter.

- Use IPMT function)

Recreate the above in excel. You seek to borrow $5,000 from a friend. You promise to repay the loan in 36 monthly repayments commencing today. If the effective annual interest (EAR) rate is 26.2% what is the amount of the monthly repayment? (answer do not include $ sign; show cents eg 100.00, and should be a positive number)

Refer to the screenshot above. Jack seeks a loan of $250,000 from his bank. If repayments are annual in arrears (end-of-year), and his bank charges 20% p.a compounding monthly, what is the value he needs to enter to cell B3? (Answer in percentage to two decimal places, do not include % sign eg. 12.00)

Q8. Suppose that 12 beginning-of-month payments of $1,000 were made to an investment account paying 6% p.a compounding monthly. In Excel, to calculate the future value of the annuity at the end of 1 year we could use:

Select one:

A.

=FV(rate, nper, pmt, [pv], [type]) and specify type as 0

B.

= FV(rate, nper, pmt, [pv], [type]) and not specify type

C.

= FV(rate, nper, pmt, [pv], [type]) and specify type as 1

D.

Either A or B above

Jill wants to buy a car but needs to calculate how much she can afford to borrow. The maximum she can repay each month-end is $740 per month and the bank has indicated it will charge a fixed 5.4% p.a compounding monthly. If she takes a loan for 4 years how much can she afford to borrow? (Do not use the $ sign or commas; include cents e.g 24500.09)