Chapter 4: Q9-41BP (page 285)
If you borrow \(9,441 and are required to pay back the loan in five equal annual instalments of \)2,750, what is the interest rate associated with the loan?
The interest rate associated with the loan is 14%.
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If you invest $8,500 per period for the following number of periods, how much would you have? a. 12 years at 10 percent.
The Clearinghouse Sweepstakes has just informed you that you have won \(1 million. The amount is to be paid out at the rate of \)20,000 a year for the next 50 years. With a discount rate of 10 percent, what is the present value of your winnings?
Carrie Tune will receive \(19,500 for the next 20 years as a payment for a new song she has written. If a 10 percent rate is applied, should she be willing to sell out her future rights now for \)160,000?
b. Would the present value of the funds in part a be enough to buy a $2,900 concert ticket?
Question: You will receive \(6,800 three years from now. The discount rate is 10 percent. d. Use the formula PV 5 FV 3 _____ 1 (1 1 i) n to find the present value of \)6,600 received three years from now at 10 percent interest.
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