Part II: PROBLEMS

Round all dollar answers to 2 decimal places, round time (years or months) answers to one (1) decimal place and record interest rates as percent values rounded to one (1) decimal place. However, be sure to NOT input a dollar sign, commas, or percent sign on D2L. For example, record $3,284.33965 as 3284.34, record 37.285432 years as 37.3 and record .064358 = 6.4358% as 6.4.

1. Lady Dimitrescu just agreed to a new loan to purchase a $3,820 computer. The loan has a 22.6% annual interest rate, compounded monthly. The minimum monthly payment is $80, and Lady Dimitrescu does not expect to ever pay more than the minimum payment. Assuming no additional charges or costs will occur with this loan, how much will Lady Dimitrescu still owe on the loan (if anything) exactly 36 months from today (when she expects she will need to purchase another new computer)?

2. For $250,000 today, Kimberly can purchase an ordinary annuity which will pay her $25,000.00 per year for each of the next 15 years (first payment to be received exactly 1 years from today). What is the annual interest rate implicit in this investment? Round your answer to the nearest tenth (for example, record 0.4325 as 43.3% - but do not include the percent sign in iCollege.

3. Xavier is considering borrowing $10,000,000 for 25 years with a loan that has an interest rate of 18.65% p.a. The loan agreement calls for 25 equal annual payments, to be paid at the end of each of the next 25 years (first payment due exactly one year from today). Assuming that Xavier makes the required payment every year for the next 6 years, how much of the sixth payment will go to interest?

4. Cloud Strife is going to deposit $175,000 into a certificate of deposit (CD) at a 3.99% annual rate (compounded annually) with a maturity of 75 months. How much money will Cloud receive when the CD matures?