Name: ______________________________________________

1) How long will it take a lump sum to double at 2%? What about at 8%?

2) Find the present value of an annuity that pays $1,000 per month for a period of 10 years. Assume the discount rate is 6%

3) Referring to Question 2, suppose you are asked to find the present value of that same annuity described in Question 2, but the payments do not begin for 25 years.

4) You borrow $65,000 and promise to pay back $98,000 at the end of 15 years. What is the effective annual rate of interest?

5) What is the monthly cost of a simple 30-year home mortgage for $400,000 at 4.25%?

6) What is the monthly cost of a $30,000 balloon loan at 5%. Assume that you will owe $30,000 at the end of 10 years.

7) A bank offers a CD earning 2% compounded daily. What is the effective annual rate (EAR)?

12:25 Assignment2.pdf Assignment 2.pdf 11 How long will take a lump sure to double at 2567 What about at ? 2] Find the present value of an annuity that pays $1.000 per month for a period of 10 years Assume the discount rate is 6% 3) Referring to Question 2 suppose you are asked to find the present value of th described in Question, but the payments do not been for 25 years e annuity 4 the end of 15 years. What is the You borrow $65,000 and promise to pay back $9.000 effective annual rate of interest? 5) What is the monthly cost of a simple 30 year home more for $400,000 25 6) What is the monthly cost of $30,000 balloon loan a the end of 10 years s ume that you will owe $30.000 7) A bank offers a Camione t d he the effective ale EAR