Implied Interest Rate and Period (Answer All Please!)

Present value of annuities is also used to calculate the rate of return expected from an investment and, thus, has several practical applications. Michael needed money for some unexpected expenses, so he borrowed $5, 755.97 from a friend and agreed to repay the loan in six equal installments of $1, 400 at the end of each year. What is the implied interest rate in this agreement? 12.00% 16.20% 10.44% 14.16% Michael's friend Eric wants to go to business school. While his father will share some of the expenses, Eric still needs to put in the rest on his own. But Eric has no money saved for it yet. According to his calculations, it will cost him $37, 476 to complete the business program, including tuition, cost of living, and other expenses. He has decided to deposit $4, 200 at the end of every year in a mutual fund, from which he expects to earn a fixed 8% rate of return. Approximately how long will it take for Eric to save enough money to go to business school? 8.75 years 5.95 years 9.45 years 7.00 years The present value of an annuity is the sum of the discounted value of all future cash flows. You have the opportunity to invest in several annuities. Which of the following 10-year annuities has the greatest present value (PV)? Assume that all annuities have the same positive interest rate. An annuity that pays $1,000 at the end of each year An annuity that pays $1,000 at the beginning of each year An annuity that pays $500 at the beginning of every six months An annuity that pays $500 at the end of every six months An ordinary annuity selling at $10, 577.28 today promises to make equal payments at the end of each year for the next seven years (N). If the annuity's appropriate interest rate (i) remains at 6.50% during this time, what will be the value of the annual annuity payment (PMT)? $2, 410.71 $1, 928.57 $2, 796.43 $3, 717.38 You just won the lottery. Congratulations! The jackpot is $60,000,000, paid in seven equal, annual payments. The first payment on the lottery jackpot will be made today. In PV terms, how much did you really win? Use an annual interest rate of 6.50%. In PV terms, you won