You plan to lease a Saab automobile that sells for $22,657 and has no salvage value. If the monthly lease is
$499, with the first of 60 payments due immediately. What is the implied annual interest rate on your lease?
What is the present value of the following net cash flows if the discount rate is 12%:
Year Cash Flow
1-5 $10,000 each year
6-10 $15,000 each year
11-15 $17,000 each year
What is the present value of the following net cash flows if the discount rate is 10%?
Year Net Cash Flow
1-10 $20,000 each year
11-15 $15,000 each year
16-20 $10,000 each year
Your monthly statement from your bank credit card shows that the monthly rate of interest is 1.5%. What is
the annual effective rate of interest you are being charged on your credit card?
What monthly rate of interest will yield an annual effective rate of interest of 14%?
Al Corbin is 25 years old today and he wishes to accumulate enough money over the next 35 years to provide
for a 20 year retirement annuity of $100,000 at the beginning of each year, starting with his 60th birthday. He
can save $2,000 at the end of each of the next 10 years and $3,000 each year for the following 10 years. How
much must he save each year at the end of years 21 through 35 to obtain his goal? Assume that the average
rate of return over the entire period will be 10%.
Assume you purchased a home and borrowed $100,000 at a rate of 8% compounded monthly over 30 years.
What is your monthly payment?
Which of the following statements is/are correct?
I. At 6% interest, the present value of: $400 for the first year, $600 for the second year, and $800 for the third
year is $1,603.00.
II. The future value of a mixed cash flow stream (if it is from an annuity due): $400 for the first year, $600 for
the second year, and $800 for the third year is $1,999 (rounded).
Determine the present value of $5,000 to be received 4 years from now at the continuously discounted rate of
First Texas National Bank is offering a one-year CD with a nominal rate of 9.5 percent. If compounding
occurs continuously, what is the effective annual rate?