Assignment 1:
- Assume that you just received an ordinary annuity with 6 annual payments of $4,000 each. You plan to invest the payments at a 5% interest rate. What will the value of the payments be at the end of the 6th year?
- Suppose it is January 1st and you deposited $3,000 in a savings account that pays 9 percent with daily compounding and a 360-day year. How much could you withdraw after nine months, assuming this is nine-twelfths of a year?
Assignment 2:
Assume a bank charges a 15.5% APR (annual percentage rate) on credit card holder compounds quarterly. What EAR (effective annual rate) is the bank is charging? What if they change compounding to bi-monthly? Compare the result from the bank perspective and the credit card holder perspective (your calculation should be set to 4 decimal places).
Assignment 3:
- Determine the annual payment, and
- Prepare an amortization schedule based on the following information. Utilize the example provided in the text as well to see the end result:
- Loan amount = $25,000
- Annual Interest rate = 6% compounded annually.
- The loan matures or the loan term = 5 years
- You must include all the six categories (year, beginning balance, payment, interest, principal, and balance)