Choose to borrow money at lower effective annual rate

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Reference no: EM131878587

1. You just inherit a windfall from your grandparents today. The first payment of $72,000 will be paid right away, and the future payment will grow at 3.5% per year and will last forever. What will be the present value of this inheritance, given that the interest rate will be 5.5% forever?

2. BlackShark Credit Union charges a stated annual rate of 6.2 percent compounded quarterly on the line of credit. WhiteShark Bank charges an effective monthly rate of 0.77 percent. As a borrower, from which bank would you choose to borrow money at a lower effective annual rate?

3. Brandon owes $418,000 on his mortgage. His monthly payments are $1828.00 and he has 28 years of payments remaining. His monthly payment will be due in one month. What is the effectively month rate that Brandon is being charged?

Reference no: EM131878587

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