Annual payments on this interest-only loan

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Reference no: EM131886195

1. Kelsie has taken out a 4-year loan on which she will pay only the interest that accrues each year on the $8,000 she borrowed. Her annual interest rate is 12%. What are Kelsie's annual payments on this interest-only loan?

a. $8,960

b. $8,000

c. $3,951

d. Zero

e. $960

2. Today, you are purchasing a 15-year, 8 percent annuity at a cost of $70,000. The annuity will pay annual payments. What is the amount of each payment if the present value factor for this annuity is 8.5595 ? (choose the closest answer)

a. $5,485.35

b. $6,329.57

c. $4,919.41

d. $8,178.07

e. $7,128.73

3. How much must be invested today in order to generate a 5-year annuity of $1,000 per year, with the first payment 1 year from today, at an interest rate of 12%? This question is which one of the following types of problems?

a. Future value of an annuity

b. Future value of a lump sum

c. Present value of a lump sum

d. Present value of an annuity

e. Present value of a perpetuity

Reference no: EM131886195

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