Interest rate for an annuity Personal Finance Problem Anna Waldheim was seriously injured in an industrial accident. She sued the responsible parties and was awarded a judgment of $2,000,000. Today, she and her attorney are attending a settlement conference with the defendants. The defendants have made an initial offer of $184,713 per year for 18 years. Anna plans to counteroffer at $275,875 per year for 18 years. Both the offer and the counteroffer have a present value of $2,000,000, the amount of the judgment. Both assume payments at the end of each year. a. What interest rate assumption have the defendants used in their offer (rounded to the nearest whole percent)? b. What interest rate assumption have Anna and her lawyer used in their counteroffer (rounded to the nearest whole percent)? C. Anna is willing to settle for an annuity that carries an interest rate assumption of 9%. What annual payment would be acceptable to her? . a. The interest rate assumption the defendants used in their offer, r. is %. (Round to the nearest whole percent.) b. The interest rate assumption Anna and her lawyer used in their counteroffer is % (Round to the nearest whole percent.) c. If Anna is willing to settle for an annuity that carries an interest rate assumption of 9%, she would be willing to accept an annual payment of (Round to the nearest dollar.) Time to repay installment loan Personal Finance Problem Mia Salto wishes to determine how long it will take to repay a $14.000 loan given that the lender requires her to make annual end-of-year installment payments of $2.450. a. If the interest rate on the loan is 12%, how long will it take for her to repay the loan fully? b. How long will it take if the interest rate is 9%? c. How long will it take if she has to pay 15% annual interest? d. Reviewing your answers in parts a, b, and c, describe the general relationship between the interest rate and the amount of time it will take Mia to repay the loan fully a. If Mia can borrow at an annual interest rate of 12%, the amount of time it will take for her to repay the loan fully is years. (Round to two decimal places.) b. If Mia can borrow at an annual interest rate of 9%. the amount of time it will take for her to repay the loan fully is years. (Round to two decimal places) c. If Mia can borrow at an annual interest rate of 1596, the amount of time it will take for her to repay the loan fully is years. (Round to two decimal places.) d. Reviewing your answers in parts a, b, and c, describe the general relationship between the interest rate and the amount of time it will take Mia to repay the loan fully. (Select the best answer below.) A. The lower the interest rate, the greater the number of time periods needed to repay the loan fully. OB. The interest rate does not affect how long it will take to repay the loan. OC. The higher the interest rate, the greater the number of time periods needed to repay the loan fully. OD. The higher the interest rate, the lower the number of time periods needed to repay the loan fully
