Problem 6-16 Calculating Future Values [LO1]

What is the future value of $1,800 in 19 years assuming an interest rate of 7.1 percent compounded semiannually? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Problem 6-19 EAR versus APR [LO4]

Big Doms Pawn Shop charges an interest rate of 26.2 percent per month on loans to its customers. Like all lenders, Big Dom must report an APR to consumers.

What rate should the shop report? (Round your answer to 1 decimal place. (e.g., 32.1))

APR

%

What is the effective annual rate? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

EAR

%

Problem 6-23 Valuing Perpetuities [LO1]

Live Forever Life Insurance Co. is selling a perpetuity contract that pays $1,450 monthly. The contract currently sells for $114,000.

What is the monthly return on this investment vehicle? (Round your answer to 2 decimal places. (e.g., 32.16))

Monthly return

% per month

What is the APR? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

APR

%

What is the effective annual return? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Effective annual return

%

Problem 6-27 Discounted Cash Flow Analysis [LO1]

The appropriate discount rate for the following cash flows is 9 percent compounded quarterly.

Year				Cash Flow
	1			$	810
	2				890
	3				0
	4				1,480

What is the present value of the cash flows? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$