Question
PART 2: FINANCE a) What is the most that you would pay for an investment that promises to pay $20,258.00 a year forever with the
PART 2: FINANCE
a) What is the most that you would pay for an investment that promises to pay $20,258.00 a year forever with the first payment starting one year from now? Assume that your required rate of return for this investment 23.70%.
b) A loan has a stated annual rate of 6.55%. If loan payments are made monthly and interest is compounded monthly, what is the effective annual rate of interest?
c) You invest $2134.00 at the beginning of every year and your friend invests $2134.00 at the end of every year. If you both earn an annual rate of return of 12.56%, how much more money will you have after 12 years?
d) You currently have $1784.00 in a retirement savings account that earns an annual return of 6.00%. You want to retire in 47 years with $1,000,000. How much more do you need to save at the end of every year to reach your retirement goal?
e) You currently owe $3206.00 of your credit card that charges an annual interest rate of 18.70%. You make $136 of new charges every month and make a payment of $215 every month. What will your credit card balance be in three months?
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