1. Cecilia Jeffries purchased an investment for $49,090.75. From this investment
ID: 2498847 • Letter: 1
Question
1. Cecilia Jeffries purchased an investment for $49,090.75. From this investment, she will receive $5,000 annually for the next 20 years starting one year from now. What rate of interest will Cecilia be earning on her investment? (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Rate of interest- %
2. You are purchasing a car for $25,000, and you obtain financing as follows: $2,500 down payment, 12% interest, semiannual payments over 5 years.
Compute the payment you will make every 6 months. (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round answer to 2 decimal places, e.g. 52.75.)
Payment $
3. Sarah Denny purchased an investment for $40,260.48. From this investment, she will receive $6,000 annually for the next 10 years starting one year from now. What rate of interest will Sarah be earning on her investment? (For calculation purposes, use 5 decimal places as displayed in the factor table provided.)
Rate of Interest %
Explanation / Answer
1)
($49,090.75 ÷ $5,000) = 9.81815
Rate of Interest = 9.81815
2)
25,000 cost – $2,500 down payment = $22,500
“PV of annuity factor for 10 periods and 6% is 7.36009”
Payment ´ 7.36009 = $22,500
Payment = $22,500/7.36009 = $3,057.03
3)
$40,260.48 ¸ $6,000 = 6.71008 (10 periods and 8%) = 6.71008
Rate of Interest = 6.71008
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.