How long will it take you to double your money if the interest rate is 6%?...
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How long will it take you to double your money if the interest rate is 6%? 6. The APR of a specific loan is 36%. The loan is compounded monthly. What is the APY of this loan? 7. The APY of a loan is 122%. The loan is compounded weekly. What is the APR of this loan? 8. A payday loan offers the following "great" terms: Write them a check for $250, and they will give you $200 today. They promise to hold the check for two weeks before depositing it. What is the APR of this loan? 9. What is the APY of the payday loan discussed in Problem 8 above? 10. You deposit $1000 into an account that pays 10% per year, compounded monthly. How much money will you have in 12 years? 11. A loan shark offers you the following terms: I'll give you $5 today. You will pay me back $6 next week. What is the APR of the shark's terms? 12. Refer to Problem 11 above. What is the APY of the loan shark's terms? 13. Your first child was just born. Your parents tell you that they want to give your child a meaningful birth gift of their freshman year in college. Assuming that it will cost $35,000 to attend their freshman year (18 years from now), how much money will they need to deposit into the child's account if the interest rate is 7% per year? (Assume m = 1.) 14. Your grandmother just wrote you into her will. She has promised to leave you $250,000 upon her death. Actuarial tables show that she has a life expectancy of 12 years. If the interest rate is 5%, what is her promise worth to you today? 15. A credit card offers you the following terms: "This credit card has an APR of 36%; 3% per month, 12 times per year." What is the APY of that offer? 16. An investment has a price today of $425. It will be worth $1000 in 35 years. What is the interest rate on this investment? How long will it take you to double your money if the interest rate is 6%? 6. The APR of a specific loan is 36%. The loan is compounded monthly. What is the APY of this loan? 7. The APY of a loan is 122%. The loan is compounded weekly. What is the APR of this loan? 8. A payday loan offers the following "great" terms: Write them a check for $250, and they will give you $200 today. They promise to hold the check for two weeks before depositing it. What is the APR of this loan? 9. What is the APY of the payday loan discussed in Problem 8 above? 10. You deposit $1000 into an account that pays 10% per year, compounded monthly. How much money will you have in 12 years? 11. A loan shark offers you the following terms: I'll give you $5 today. You will pay me back $6 next week. What is the APR of the shark's terms? 12. Refer to Problem 11 above. What is the APY of the loan shark's terms? 13. Your first child was just born. Your parents tell you that they want to give your child a meaningful birth gift of their freshman year in college. Assuming that it will cost $35,000 to attend their freshman year (18 years from now), how much money will they need to deposit into the child's account if the interest rate is 7% per year? (Assume m = 1.) 14. Your grandmother just wrote you into her will. She has promised to leave you $250,000 upon her death. Actuarial tables show that she has a life expectancy of 12 years. If the interest rate is 5%, what is her promise worth to you today? 15. A credit card offers you the following terms: "This credit card has an APR of 36%; 3% per month, 12 times per year." What is the APY of that offer? 16. An investment has a price today of $425. It will be worth $1000 in 35 years. What is the interest rate on this investment?
Expert Answer:
Answer rating: 100% (QA)
To answer your questions lets go through each one step by step 6 To calculate the APY Annual Percentage Yield of a loan compounded monthly you can use the following formula APY 1 APRnn 1 where APR is ... View the full answer
Related Book For
Corporate Finance A Focused Approach
ISBN: 978-1305637108
6th edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham
Posted Date:
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