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Luke wants to save up $2,000 in two years for a new computer. He can invest in a fund earning a 16% rate of return,
Luke wants to save up $2,000 in two years for a new computer. He can invest in a fund earning a 16% rate of return, compounded monthly. How much must he deposit into the fund today to have the necessary funds in two years? Round to two decimal places. (i) Develop the timeline (linear representation of the timing of cash flows) (i) Identify the time value of money variable (PV, FV, PMT, N or Rate) which needs to be calculated in the question. (iii) Identify the values of the remaining four variables (PV, FV, PMT, N or Rate) from the question. Be sure to input positive or negative signs. (iv) Calculate the correct value of the variable identified in step(ii). Cillian takes out a payday loan for $400. In one month, he must pay back the loan plus $50 in interest. Assuming monthly compounding, what is the annual interest rate (APR) he is being charged? Submit your answer as a percentage and round to two decimal places. (1) Develop the timeline (linear representation of the timing of cash flows) (11) Identify the time value of money variable (PV, FV, PMT, Nor Rate) which needs to be calculated in the question. (i) Identify the values of the remaining four variables (PV, FV, PMT, N or Rate) from the question. Be sure to input positive or negative signs. (iv) Calculate the correct value of the variable identified in step (ii). 1
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