1. A man deposits $1200, 2000, and $4000 at the end of 1, 2, and 3 years, respec

ID: 2370115 • Letter: 1

Question

1. A man deposits $1200, 2000, and $4000 at the end of 1, 2, and 3 years, respectively,

at 10% interest per year. What will be the balance accumulated at the end of 6 years?

2. A perspective homebuyer wants to finance the purchase of a house costing $150,000

over a period of 15 years. If the interest is 6 percent per year, what will be a) the

annual payment, and b) the monthly payment?

3. A bank offers the following interest rates: a) 6% compounded annually; b) 5.9%

compounded semiannually; c) 5.8 compounded quarterly d) 5.5% compounded

monthly; e) 5.45% compounded continuously. Which rate would you select to

provide the highest return?

4. The maintenance for a bus, whose life is 10 years, is $1500 per year starting the

fourth year, increasing by $200 for each successive year. The interest rate is 5% per

year. What is the present worth of maintenance cost?

5. Assume you want to borrow $5,000 to pay for a vehicle. The annual interest rate that

a bank (or loan department at an auto dealer) charges will depend on the age of the

vehicle you wish to buy and also on your credit history. Some banks will not even

make loans for vehicles that are more than seven years old. To be prepared for

negotiations with the auto dealer or bank (although there is not much room for

negotiations with a bank), prepare a table of the monthly payments for the loan

amount of $5,000 at the following annual interest rates (4, 5, 6, 7, 8, 9, 10, 11, 12, 13,

14, 16, 28, 20 percent) and for three different repayment periods (24, 36 and 48

months). In addition, calculate the total amount of money re-paid and also the total

amount of interest at each interest rate for each period.

Create two plots:

a) Monthly Payment ($) vs. Annual Interest Rate (Percent); Use a scatter plot and

show each payment period (24, 36 and 48 months) as a separate series on the plot.

Be sure to completely label your plot.

b) Total Interest Paid ($) vs. Annual Interest Rate (Percent); Use a scatter plot and

show each payment period (24, 36 and 48 months) as a separate series on the plot.

Be sure to completely label your plot

go for the link

faculty.unlv.edu/.../MBA711 - Answers to Book -...

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