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Problem 10

Find the present value of each ordinary annuity. $$\$ 1200 /$$ semiannual period for 6 yr at \(10 \%\) lyear compounded semiannually

Expert verified

The present value of the ordinary annuity is approximately $11032.8.

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Chapter 4

Find the periodic payment \(R\) required to amortize a loan of \(P\) dollars over \(t\) yr with interest charged at the rate of \(r \% /\) year compounded \(m\) times a year. $$ P=80,000, r=10.5, t=30, m=12 $$

Chapter 4

Find the periodic payment \(R\) required to accumulate a sum of \(S\) dollars over \(t\) yr with interest earned at the rate of \(r \% /\) year compounded \(m\) times a year. $$ S=250,000, r=10.5, t=25, m=12 $$

Chapter 4

Fleet Street Savings Bank pays interest at the rate of \(4.25 \%\) /year compounded weekly in a savings account, whereas Washington Bank pays interest at the rate of \(4.125 \%\) /year compounded daily (assume a 365 day year). Which bank offers a better rate of interest?

Chapter 4

Five years ago, Diane secured a bank loan of $$\$ 300,000$$ to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was \(30 \mathrm{yr}\), and the interest rate was \(9 \%\) /year compounded monthly on the unpaid balance. Because the interest rate for a conventional 30 -yr home mortgage has now dropped to \(7 \% /\) year compounded monthly, Diane is thinking of refinancing her property. a. What is Diane's current monthly mortgage payment? b. What is Diane's current outstanding principal? c. If Diane decides to refinance her property by securing a 30 -yr home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of \(7 \% /\) year compounded monthly, what will be her monthly mortgage payment? d. How much less would Diane's monthly mortgage payment be if she refinances?

Chapter 4

The Sandersons are planning to refinance their home. The outstanding principal on their original loan is $$\$ 100,000$$ and was to be amortized in 240 equal monthly installments at an interest rate of \(10 \% /\) year compounded monthly. The new loan they expect to secure is to be amortized over the same period at an interest rate of 7.8\%/year compounded monthly. How much less can they expect to pay over the life of the loan in interest payments by refinancing the loan at this time?

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