- An investor age 35 deposits $10000 in a fund earning 7% compound interest until retirement at age 65. Find the amount of interest earned (calculations by hand) :
- Between ages 35 and 45
- Between ages 45 and 55
- Between ages 55 and 65
- Jim loans 10000$ to Amenda immediately, 5000$ in 3 years and 1000$ in 4 years. Amenda repays Jim with two equal payments of Y $; one payment of Y at the end of the fifth year and one payment of Y at the end of the sixth year, assuming a nominal interest rate of 6%, compounded monthly.
(a) Draw a time diagram of the cash flows.
0 1 2 3 4 5 6
(b) Evaluate Y .
- Billy contracted a loan at the bank. He pays back his loan in 3 payments : the first one is $7000 made after one year, the second one of $5000 made one year and a half after he contracted the loan, and the last one, of $3000, made two years after he contracted the loan. The interest rate is i(2) = 10%. (Do not insert code in your answers)
(a) Determine the amount of the loan.
(b) If after his first payment of $7000, Billy renegotiates his loan with the bank such that he only has one payment left of $X to do, four years after he contracted the loan, with the same interest rate, what should be the value of X ?
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