These are the only homework questions that I can't workout. I already know the answer to them but I wanted to see how it came about.
1) Input: 4 payments: $50 of the end of each of the next 3 yrs and $1,050 of the end of year 4. The cost is $900 for the security. Money is currently invested at 8% nominal with quarterly compounding. Consider EAR on securities the same as the bank. What is the present value of the security.
2) Input: $10,000 mortgage, Nominal interest is 10%. Requires payments every 6 months for 10 years. What is the total amount of interest paid during first year.
3a) Input: 5 deposits of $100 each, one every 6 months, starting today. Nominal rate is 12% with semi-annual compounding. Final value after 10 years.
3b) Input: Final value after 10 years is $1432.02. Five equal payments over next 4 quarters (starting today). Nominal interest is 12%, quarterly compounding. How large the payments should be?
4) Bank nominal interest 15%, compounded monthly. What is nominal rate for, on 3 months compounding.
5) Input: 50 years old, retires at 60 and lives until 85. First payment $40,000 = PMTpv and equal payments afterward (24 additional payments). Inflation is 5%. PV=$100,000 savings, returns 8% yearly, annual compounding. How much is the required PMT in equal deposits for the next 10 years to meet his goal?
Thanks!!!!
1) Input: 4 payments: $50 of the end of each of the next 3 yrs and $1,050 of the end of year 4. The cost is $900 for the security. Money is currently invested at 8% nominal with quarterly compounding. Consider EAR on securities the same as the bank. What is the present value of the security.
2) Input: $10,000 mortgage, Nominal interest is 10%. Requires payments every 6 months for 10 years. What is the total amount of interest paid during first year.
3a) Input: 5 deposits of $100 each, one every 6 months, starting today. Nominal rate is 12% with semi-annual compounding. Final value after 10 years.
3b) Input: Final value after 10 years is $1432.02. Five equal payments over next 4 quarters (starting today). Nominal interest is 12%, quarterly compounding. How large the payments should be?
4) Bank nominal interest 15%, compounded monthly. What is nominal rate for, on 3 months compounding.
5) Input: 50 years old, retires at 60 and lives until 85. First payment $40,000 = PMTpv and equal payments afterward (24 additional payments). Inflation is 5%. PV=$100,000 savings, returns 8% yearly, annual compounding. How much is the required PMT in equal deposits for the next 10 years to meet his goal?
Thanks!!!!