label and circle each question and answer , also draw cash flow diagram for questions 1-9
1. (Problem 3-3) A$5,000 loan was to be repaid with 5% simple annual interest. A total of $6,000 was paid. How long had the loan been outstanding? 2. (Problem 3-6) How long will it take for an investment to double at a 3% per year ? a. simple interest rate b. compound interest rate 3. (Problem 3-11) A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest. The firm will make no payments until the loan is due, when it will pay off the interest and principal in one lump sum. What is the total payment? 4. (Problem 3-22) Alvin's Uncle Arnold gave him $16,000 from selling the old family farm. Alvin wants to start college and have $12,000 available to buy a used car when he graduates in 4 years. Alvin earns 2% in his savings account. How much can he spend on a motorcycle now and still have enough to grow to the $12,000 he needs when he graduates? 5. (Problem 3-26) In 1995 an anonymous private collector purchased a painting by Picasso entitled Angel Fernandez de Soto for $29,152,000. The picture depicts Picasso's friend de Soto seated in a Barcelona cafe drinking absinthe. The painting was done in 1903 and was valued then at $600. If Barcelona caf drinking absinthe. The painting was done in 1903 and was valued then at $600. If the painting was owned by the same family until its sale in 1995, what rate of return did they receive on the $600 investment? (Problem 3-29) One thousand dollars is borrowed for one year at an interest rate of 1/2% per month. If the same sum of money could be borrowed for the same period at an interest rate of 6% per year, how much could be saved in interest charges? (Problem 3-30) A sum of money invested at 2\% per 6-month period (semiannually) will double in amount in approximately how many years? (Problem 3-36) An engineer invested $5,000 in the stock market. For the first 6 years the average return was 9% annually, and then it averaged 3% for 4 years. How much is in the account after 10 years? (Problem 3-37) Camila Vega made an investment of $10,000 in a savings account 10 years ago. This account paid interest of 4% for the first 4 years and 6% interest for the remaining 6 years. How much is this investment worth now? 10. (Problem 3-38) A thousand dollars is invested in Green Bonds for 7 months at an interest rate of 0.75% per month. a. What is the nominal annual interest rate? b. What is the effective annual interest rate? 11. (Problem 3-40) If the nominal annual interest rate is 9% compounded quarterly, what is the effective annual interest rate? 12. (Problem 3-41) A local store charges 1121% each month on the unpaid balance for its charge account. What nominal annual interest rate is being charged? What is the effective interest rate? 13. (Problem 3-42) What interest rate, compounded monthly, is equivalent to a 10.04% effective interest rate? 14. (Problem 3-48) Steelgrave Financing offers payday loans. The firm charges a $10 interest fee for a one-week period on a $250 loan. What are the nominal and effective annual interest rates on this loan? (Assume there are 52 weeks in a year.) 1. (Problem 3-3) A$5,000 loan was to be repaid with 5% simple annual interest. A total of $6,000 was paid. How long had the loan been outstanding? 2. (Problem 3-6) How long will it take for an investment to double at a 3% per year ? a. simple interest rate b. compound interest rate 3. (Problem 3-11) A firm has borrowed $5,000,000 for 5 years at 10% per year compound interest. The firm will make no payments until the loan is due, when it will pay off the interest and principal in one lump sum. What is the total payment? 4. (Problem 3-22) Alvin's Uncle Arnold gave him $16,000 from selling the old family farm. Alvin wants to start college and have $12,000 available to buy a used car when he graduates in 4 years. Alvin earns 2% in his savings account. How much can he spend on a motorcycle now and still have enough to grow to the $12,000 he needs when he graduates? 5. (Problem 3-26) In 1995 an anonymous private collector purchased a painting by Picasso entitled Angel Fernandez de Soto for $29,152,000. The picture depicts Picasso's friend de Soto seated in a Barcelona cafe drinking absinthe. The painting was done in 1903 and was valued then at $600. If Barcelona caf drinking absinthe. The painting was done in 1903 and was valued then at $600. If the painting was owned by the same family until its sale in 1995, what rate of return did they receive on the $600 investment? (Problem 3-29) One thousand dollars is borrowed for one year at an interest rate of 1/2% per month. If the same sum of money could be borrowed for the same period at an interest rate of 6% per year, how much could be saved in interest charges? (Problem 3-30) A sum of money invested at 2\% per 6-month period (semiannually) will double in amount in approximately how many years? (Problem 3-36) An engineer invested $5,000 in the stock market. For the first 6 years the average return was 9% annually, and then it averaged 3% for 4 years. How much is in the account after 10 years? (Problem 3-37) Camila Vega made an investment of $10,000 in a savings account 10 years ago. This account paid interest of 4% for the first 4 years and 6% interest for the remaining 6 years. How much is this investment worth now? 10. (Problem 3-38) A thousand dollars is invested in Green Bonds for 7 months at an interest rate of 0.75% per month. a. What is the nominal annual interest rate? b. What is the effective annual interest rate? 11. (Problem 3-40) If the nominal annual interest rate is 9% compounded quarterly, what is the effective annual interest rate? 12. (Problem 3-41) A local store charges 1121% each month on the unpaid balance for its charge account. What nominal annual interest rate is being charged? What is the effective interest rate? 13. (Problem 3-42) What interest rate, compounded monthly, is equivalent to a 10.04% effective interest rate? 14. (Problem 3-48) Steelgrave Financing offers payday loans. The firm charges a $10 interest fee for a one-week period on a $250 loan. What are the nominal and effective annual interest rates on this loan? (Assume there are 52 weeks in a year.)
