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Determine the amount of interest

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Problem 1 - On June 1st, Wilkins bought a boat for $200,000. He paid $50,000 in cash at time of the purchase and agreed to pay the balance in four equal annual installments that include both the principal and 10 percent interest on the declining balance.

a) Determine the amount of the annual payment.

b) Determine the total dollars of interest that Wilkins will pay for this loan.

c) Determine the amount of interest that is included in the first payment. It is not necessary to complete an amortization schedule.

Problem 2 - On 9/24 at the end of the day, you sold (took a short position in) 1 futures contract (one contract is agreement to buy or sell Euros 125,000) at a rate of USD 1.15 per Euro, contract expires on 10/18. Initial margin=$2,875 and maintenance margin is $2,150. On 9/25 and 9/26, the futures rate expiring on 10/18 is USD 1.155, and USD 1.165 respectively. As per "Marked to Market" daily mechanism of currency futures contracts, what shall be your margin account balance at the end of 1/25 (Assuming that you'll not withdraw money from your margin account and you do not earn interest on your margin account)?

Reference no: EM132906892

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