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Problem 1 (25 points) The table attached represents the data of different payments into a saving account in two years. Use the factor notation process
Problem 1 (25 points) The table attached represents the data of different payments into a saving account in two years. Use the factor notation process to answer the following questions. First Year Second Year Payments: $500 per quarter. Payments: $1000 per month. Interest rate: 5% APR compounded monthly. Interest rate: 6% APR compounded monthly a) Draw the cash flow diagram using the line below and load appropriately. 17 18 19 20 21 22 23 24 b) Determine the following elements for each interest zone and use the appropriate formula to calculate the effective interest rate for each APR. Zone(1) : K= C= N= Zone(2) : K= C= N= a) Compute the present worth of this investment (Fv). Problem 2 (25 points) You are in a process of buying a $30000 new car from a local car dealer. The dealer agreed to let you pay10% down payment and pay the remainder in a form of monthly payment for four consecutive years with 12% APR compounded monthly. a) Draw the cash flow diagram and load appropriately (First year only) 2 3 1 10 12 0 1 2 3 4 5 6 7 8 9 b) Determine the elements needed and calculate the effective interest rate. K= C= N= c) Calculate your monthly payment? Problem 1 (25 points) The table attached represents the data of different payments into a saving account in two years. Use the factor notation process to answer the following questions. First Year Second Year Payments: $500 per quarter. Payments: $1000 per month. Interest rate: 5% APR compounded monthly. Interest rate: 6% APR compounded monthly a) Draw the cash flow diagram using the line below and load appropriately. 17 18 19 20 21 22 23 24 b) Determine the following elements for each interest zone and use the appropriate formula to calculate the effective interest rate for each APR. Zone(1) : K= C= N= Zone(2) : K= C= N= a) Compute the present worth of this investment (Fv). Problem 2 (25 points) You are in a process of buying a $30000 new car from a local car dealer. The dealer agreed to let you pay10% down payment and pay the remainder in a form of monthly payment for four consecutive years with 12% APR compounded monthly. a) Draw the cash flow diagram and load appropriately (First year only) 2 3 1 10 12 0 1 2 3 4 5 6 7 8 9 b) Determine the elements needed and calculate the effective interest rate. K= C= N= c) Calculate your monthly payment
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