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LO 4 1 4 . Calculating EAR First National Bank charges 1 3 . 8 percent compounded monthly on its business loans. First United Bank
LO Calculating EAR First National Bank charges percent compounded monthly on its business loans. First United Bank charges percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan?
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LO Calculating APR Evergreen Credit Corp. wants to earn an effective annual return on its consumer loans of percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? Explain why this rate is misleading to an uninformed borrower.
LO Calculating Future Values What is the future value of $ in years assuming an APR of percent compounded semiannually?
LO Calculating Future Values SpartanCredit Bank is offering percent compounded daily on its savings accounts. If you deposit $ today, how much will you have in the account in years? In years? In years?
LO Calculating Present Values An investment will pay you $ in years. If the appropriate discount rate is percent compounded daily, what is the present value?
LO EAR versus APR Big Dom's Pawn Shop charges an interest rate of percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers. What rate should the shop report? What is the effective annual rate?
LO Calculating Loan Payments You want to buy a new sports coupe for $ and the finance office at the dealership has quoted you a loan with an APR of percent for months to buy the car. What will your monthly payments be What is the effective annual rate on this loan?
LO Calculating Number of Periods One of your customers has a delinquent accounts payable balance. You've mutually agreed to a repayment schedule of $ per month. You will charge percent per month interest on the overdue balance. If the current balance is $ how long will it take for the account to be paid off?
LO Calculating EAR Friendly's Quick Loans, Inc., offers you "Three for four, or I knock on your door." This means you get $ today and repay $ when you get your paycheck in one week or else What's the effective annual return Friendly's earns on this lending business? If you were brave enough to ask, what APR would Friendly's say you were paying?
LO Valuing Perpetuities Live Forever Life Insurance Co is selling a perpetual annuity contract that pays $ monthly. The contract currently sells for $ What is the monthly return on this investment vehicle? What is the APR? The effective annual return?
LO Calculating Annuity Future Values You are to make monthly deposits of $ into a retirement account that pays percent
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