1. If you start making $75 monthly contributions today and continue them for four years, what is their future value if the compounding rate is 12 percent APR? (Do not round intermediate calculations and round your final answer to 2 decimal places.) What is the present value of this annuity?
2. Payday loans are very short-term loans that charge very high interest rates. You can borrow $225 today and repay $300 in two weeks. What is the compounded annual rate implied by this 33.33 percent rate charged for only two weeks? (Hint: Compound the 2-week return 26 times for the annual return.) (Do not round intermediate calculations and round your final answer to the nearest whole percent.)
3. What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $75,000 in six years? (Round your answer to 2 decimal places.)
4. You wish to buy a $25,000 car. The dealer offers you a 4-year loan with a 9 percent APR. What are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
How would the payment differ if you paid interest only? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
5. Given an interest rate of 8 percent, compute the year 7 future value if deposits of $1,000 and $2,000 are made in years 1 and 3, respectively, and a withdrawal of $700 is made in year 4. (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Create the amortization schedule for a loan of $15,000, paid monthly over three years using a 9 percent APR. Enter the data for the first three months. (Round your answers to 2 decimal places.)
6. Rachel purchased a car for $15,000 three years ago using a 4-year loan with an interest rate of 8 percent. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan.
What is the minimum price Rachel would need to receive for her car? Calculate her monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan. (Do not round intermediate calculations and round your final answer to 2 decimal places.)