Find the present value, using the present value formula

| August 30, 2017

uestion
1. Find the present value, using the present value formula and a calculator. (Round your answer to the nearest cent.)
Achieve $225,500 at 8.15% compounded continuously for 8 years, 125 days.
$

2. Suppose that an insurance agent offers you a policy that will provide you with a yearly income of $70,000 in 30 years. What is the comparable salary today, assuming an inflation rate of 4% compounded annually? (Round your answer to the nearest cent.)
$

3. Convert the credit card rate to the APR.
Oregon,
1
1
4
%
per month
%

4. Assume the car can be purchased for 0% down for 60 months (in lieu of rebate).
A car with a sticker price of $42,900 with factory and dealer rebates of $5,100
(a) Find the monthly payment if financed for 60 months at 0% APR. (Round your answer to the nearest cent.)
$

(b) Find the monthly payment if financed at 2.5% add-on interest for 60 months. (Round your answer to the nearest cent.)
$

(c) Use the APR approximation formula to find the APR for part (b). (Round your answer to one decimal place.)
%

(d) State whether the 0% APR or the 2.5% add-on rate should be preferred.
0% APR
2.5% add-on rate

5. Use a calculator to evaluate an ordinary annuity formula
A = m

1 +
r
n
nt

− 1
r
n

for m, r, and t (respectively). Assume monthly payments. (Round your answer to the nearest cent.)
$150; 4%; 40 yr.
A =

6. Find the monthly payment for the loan. (Round your answer to the nearest cent.)
$700 loan for 12 months at 11%.

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