anxiety 4-1
December 28, 2020
Risk Management
December 28, 2020

Finance problems

P5-36 Changing compounding frequency. Using annual, semiannual, and quarterly compounding periods for each of the following, (1) Calculate the future value if $5000 is depositing initially and (2) determine the effective annual rate (EAR). a. at 12% annual interest for 5 years. b. at 16% annual interest for 6 years. c. at 20% annual interest for 10 years. P5-43 Creating a retirement fund. To Supplement your planned retirement in exactly 42 years, you estimate that you need to accumulate $220,000 by the end of 42 years from today. You plan to make equal, annual, end of the year deposits into an account paying 8% annual interest. a. How long must the annual deposits be to create the $220,000 fund by the end of 42 years? b. If you can afford to deposit only $600 per year into the account, how much will you have accumulated by the end of the 42 year? P5-48 Loan amortization schedule. Joan Messineo borrowed $15,000 at 14% annual rate of interest to be repaid over 3 years. The loan amoritized into 3 equal , annual, end of the year payments. a. Calculate the annual, end of the year loan payment. b. Prepare the loan amortization schedule showing interest and principal breakdown of each of the 3 loan payments. c. Explain why the interest portion of each payment declines with the passage of time. Show all work.

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