a. A piece of machinery depreciates in value by 5% a year. Determine its value in 3 years’ time if its current value is $50 000.

b. Simon decides to buy a new sofa which is available at each of three stores at the same fixed price. He decides to borrow the money using each store’s credit facility.
Store A has an effective rate of interest of 12.6%.
Store B charges interest at a rate of 10.5% compounded continuously.
Store C charges interest at a rate of 11.5% compounded quarterly

c. Determine the monthly repayments needed to repay a $125 000 loan which is paid back over 20 years when the interest rate is 7% compounded annually. Round your answer to 2 decimal places.

Answer rating: 100% (QA)

Solution A Value after year 1 50000 1 005 47500 Value a... View the full answer