These questions look easy but I can't figure how to find the answers.
1. You borrowed $30,000 to go to school. The bank agreed that you could repay the loan by making 180 equal monthly payments, starting 12 months from now. If the bank is charging 8% per year compounded semi-annually, what are your monthly payments?
a) $284.45
b) $305.65
c) $307.65
d) $310.09
e) $334.90
I don't know how to factor in the fact that it starts 12 months from now instead of today. I know what numbers to put in the calculator if I started paying monthly payments now but not 12 months from now. The answer is B but I don't know how to calculate it.
2. You purchase a 10 year, 1,000 face value bond that has a 6% coupon rate (the coupons are paid semi-annually). The yield to maturity on the bond is 6% per year compounded semi-annually. Five years later you decide to sell the bond for $1,050. What is your average annual rate of return on this investment? Express your answer as a rate per year compounded semi-annually.
a) 3.00%
b) 3.42%
c) 6.47%
d) 6.86%
e) 7.14%
The answer is D but still don't know how to calculate it.
3. The Really Expensive Bank Inc is offering a special deal. You may borrow $1,000 today and make payments of $20 per week, at the end of each week for the next 2 years to pay off the loan. What is the effective annual rate of interest is charging you?
a) 0.15%
b) 1.63%
c) 2.31%
d) 65.7%
e) 131.4%
The answer is E. Still very confusing here.
Please help.
1. You borrowed $30,000 to go to school. The bank agreed that you could repay the loan by making 180 equal monthly payments, starting 12 months from now. If the bank is charging 8% per year compounded semi-annually, what are your monthly payments?
a) $284.45
b) $305.65
c) $307.65
d) $310.09
e) $334.90
I don't know how to factor in the fact that it starts 12 months from now instead of today. I know what numbers to put in the calculator if I started paying monthly payments now but not 12 months from now. The answer is B but I don't know how to calculate it.
2. You purchase a 10 year, 1,000 face value bond that has a 6% coupon rate (the coupons are paid semi-annually). The yield to maturity on the bond is 6% per year compounded semi-annually. Five years later you decide to sell the bond for $1,050. What is your average annual rate of return on this investment? Express your answer as a rate per year compounded semi-annually.
a) 3.00%
b) 3.42%
c) 6.47%
d) 6.86%
e) 7.14%
The answer is D but still don't know how to calculate it.
3. The Really Expensive Bank Inc is offering a special deal. You may borrow $1,000 today and make payments of $20 per week, at the end of each week for the next 2 years to pay off the loan. What is the effective annual rate of interest is charging you?
a) 0.15%
b) 1.63%
c) 2.31%
d) 65.7%
e) 131.4%
The answer is E. Still very confusing here.
Please help.