INSTRUCTIONS: SOLVE ALL problems on separate pages and submit them before the deadline. Show your work, as discussed in class, providing a timeline where you believe it is needed to clarify your answer. Do not round off any intermediate calculations. Final dollar answers should be rounded to two decimal places. Unless otherwise indicated, final interest rate answers should be rounded to 6 decimal places if expressed as a decimal or 4 decimal places if expressed as a percent. You do not need to show trailing zeros (i.e., if no non-zero digits remain, 2.5% will do instead of 2.500000%) but make certain there are none. Include a timeline for obtain part-marks in the event that you misinterpret the problem. Please contact me at (787) 504-0077 if you have any questions. Your work must be completed individually in your own handwriting. Plagiarism will not be tolerated.

1) If the effective annual interest rate is 15% then what is the equivalent annual rate compounded quarterly? (2 marks)

2) If the stated annual rate of interest compounded semi-annually is 12.5% then what is the equivalent monthly rate compounded monthly? (2 marks)

3) If the stated annual rate of interest compounded annually is 8% then what is the equivalent annual rate compounded daily? (3 marks)

4) You have taken out a loan of $32,000 to buy a new Saturn. The loan will be paid off in monthly instalments starting in one month over the next 4 years (48 payments). The interest rate on the loan is a stated rate of 8.25% per year. The bank doesnt tell you, but it is compounded quarterly.

a) The monthly loan payments are _____ (3 marks)

b) The interest charged in the first month is _____ (1.5 mark)

c) The first payment reduces the principal outstanding by _____ (1.5 mark)