Your answer is incorrect.Your brother has asked you for a loan and has promised to pay you $5,400 at the end of three years. If you normally invest to earn 8.00percent per year, how much will you be willing to lend to your brother if you view this purely as a financial transaction (i.e., you don'tgive your brother a special deal)? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases roundyour final answer to the nearest penny.)Amount to be invested today$

Step 1: Given Value for Calculation Future Value = fv = $5400Time = t = 3 YearsInterest rate = r =…

Answered: Your answer is incorrect. Your brother…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are in desperate need of cash and turn to your uncle, who has offered to lend you some money. You decide to borrow $1,360 and agree to pay back $1,590 in two years. What annual interest rate is your uncle charging you? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to two decimal places, e.g. 8.72%.) Rate of interest charged by uncle enter Rate of interest charged by uncle %
To be able to go on a trip to South America, Jane decides to save for 5 years. She opens a savings account with $800. The account pays simple interest at an annual rate of 5%. She doesn't make any more deposits. Answer the following questions. If necessary, refer to the list of financial formulas. (a) How much total interest will Jane earn? X S $0 (b) What will the total amount in the account be (including interest)?
You have just borrowed $100,000 to buy a condo. You will repay the loan in equal monthly payments of $804.62 over the next 30 years. a. What monthly interest rate are you paying on the loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) b. What is the APR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) c. What is the effective annual rate on that loan? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) d. What rate is the lender more likely to quote on the loan?
Tony Ring wants to attend Northeast College. He will need $75,000 4 years from today. Assume Tony's bank pays 12% interest compounded semiannually. What must Tony deposit today so he will have $75,000 in 4 years? (Use the Table 12.3 provided.) Note: Do not round intermediate calculations. Round your answer to the nearest dollar amount. X Answer is complete but not entirely correct. Amount to be deposited $ 47,056 X
David is taking out an amortized loan for $13,000 to buy a new car and is deciding between the offers from two lenders. He wants to know which one would be the better deal over the life of the car loan, and by how much. Answer each part. Do not round intermediate computations, and round your answers to the nearest cent. If necessary, refer to the list of financial formulas. (a) A bank has offered him a 6-year car loan at an annual interest rate of 5.7%. Find the monthly payment. $0 (b) An online lending company has offered him a 7- year car loan at an annual interest rate of 5.7%. Find the monthly payment. $ (c) Suppose David pays the monthly payment each month for the full term. Which lender's car loan would have the lowest total amount to pay off, and by how much? O Bank The total amount paid would be $0 less than to the online lending company. O Online lending company The total amount paid would be $0 less than to the bank. X
How much would you have in your savings account if you put $1,902 in an account today that pays 8% for 7 years? For this problem, use the mathematical formula to find the answer and show all of your work (Do not round intermediate calculations. Round your answer to 2 decimal places.)
You borrowed $18,000 from a friend and promised to pay the loan in 12 equal annual installments beginning one year from the date of the loan. Your friend would like to be reimbursed for the time value of money at a 9% annual rate. What is the annual payment you must make to pay back your friend? Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Show less Table, Excel, or calculator function not attempted Present Value: not attempted n = not attempted i = not attempted Annual Installment:
If Laura invests $1,230,00 in an account earning 2.95% simple interest, how much money will be her account after 2 years? After 6 years? After 2 years: After 6 years: (Note: Your answers should include a dollar sign and be accurate to two decimal places) Note: You can earn partial credit on this problem.
Answer the following questions and show all working using a financial calculator. Do NOT use excel: 1. You are buying your first car for $20,000 and are paying $2,000 as a down payment. You have negotiated a nominal interest rate of 12 percent and you plan to pay-off the car over five years. What is the monthly payments you must make on this loan? 2. Maryann is planning a wedding anniversary gift of a trip to Hawaii for her husband at the end of 3 years. She will have enough to pay for the trip if she invests $2,500 per year until that anniversary and plans to make her first $2,500 investment on their first anniversary. Assume herinvestment earns a 4 percent interest rate, how much will she have saved for their trip if the interest is compounded in each of the following ways?a. Annually b. Quarterly c. Monthly
If you want to have $23,000 for a down payment for a house in six years, what amount would you need to deposit today? Assume that your money will earn 3 percent. Use the TVM keys on your calculator ... NOT the tables in the book Enter your answer as a negative value in the form: -$nn,nnn.nn Numeric Response 19,262.13 X
You are in desperate need of cash and turn to your uncle who has offered to lend you some money. You decide to borrow $1,300 and agree to pay back $1,500 in two years. What is the implied rate in this transaction?
You decide to purchase a house for $260,000. You have saved money so you are able to do a down payment of $20,000. You are able to finance your house by getting a 25 year mortgage with an interest rate of 7%. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Part 2 - Six years later, you decide to calculate your loan balance? (Use a payment value rounded to 2 decimal places. Round your final answer to 2 decimal places.) (Hint. Use the remaining years for “N”). Part 3 - If the house appreciates at 3.12 percent per year, what will be the value of the house in eight years? (Round your final answer to 2 decimal places.) NOTE: Provide a format and show your work (example: N = 6, PV = XXX, I = X%, etc.)

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