What is the future value (in S) of cash flows 1-3 at the end of year 3, assuming a 6% interest rate (compounded annually)? End of year Cash flow $500 814 750 3,500 1,250 4,530 2,350 -NMON Your Answer: Answer Which one of the following has the highest effective annual rate? 1) 6 percent compounded annually 2) 6 percent compounded semiannually 3) 6 percent compounded weekly 4) 6 percent compounded quarterly 5) 6 percent compounded monthly Lauren knows she can afford to make monthly payments of $300 for 48 months. How much will the bank lend her today on a 3% APR car loan in exchange for her promised monthly payments? Your Answer: Answer The remaining balance on an amortized loan is paid down evenly over the life of the loan. For example, if you borrow $20,000 today on a 60-month amortized loan then your remaining balance reduces by 20,000/60-$333.33 each month. True False View hint for Question 15