Problem 15..please compute and explain how you get the get your answer, thank you.

Chapter 6 Discounted Cash Flow Valuation ied an in 3 percent, value at a x X2 per year quired re- be if the exchange 14. Calculating EAR [L04] First National Bank charges 13.1 percent compounded monthly on its business loans. First United Bank charges 13.4 percent compounded semiannually. As a potential borrower, which bank would you go to for a new loan? 15. Calculating APR (L04) Elliott Credit Corp. wants to earn an effective annual re- turn on its consumer loans of 17.1 percent per year. The bank uses daily compound- ing 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. 16. Calculating Future Values (L01] What is the future value of $3,100 in 17 years assuming an interest rate of 8.4 percent compounded semiannually? 17. Calculating Future Values [LOL] Spartan Credit Bank is offering 8.1 percent compounded daily on its savings accounts. If you deposit $6,500 today, how much will you have in the account in 5 years? In 10 years? In 20 years? 18. Calculating Present Values [LO1] An investment will pay you $80,000 in 10 years. If the appropriate discount rate is 9 percent compounded daily, what is the present value? 19. EAR versus APR [LO4] Big Dom's Pawn Shop charges an interest rate of 27 per- cent 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? 20. Calculating Loan Payments (L02, 4You want to buy a new sports coupe for $84,500, and the finance office at the dealership has quoted you an APR of 5.2 per- cent for a 60-month loan to buy the car. What will your monthly payments be? What is the effective annual rate on this loan? 21. Calculating Number of Periods [LO3] One of your customers is delinquent on his accounts payable balance. You've mutually agreed to a repayment schedule of $450 per month. You will charge 1.3 percent per month interest on the overdue bal- ance. If the current balance is $18,000, how long will it take for the account to be paid off? 22. Calculating EAR [L04] Friendly's Quick Loans, Inc., offers you "three for four or I knock on your door." This means you get $3 today and repay $4 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? 23. Valuing Perpetuities (LOI) Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1.250 monthly. The contract currently sells for $245,000. What ntment yehicle? What is the APR? The effective 00 in an- tabase. If savings? ch of the you have 0 years? vings ac into the 7 amount loan for ment be? is trying per year will you