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Effective annual rate for a deposit account

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1. What is the effective annual rate for a deposit account that pays 6.2 percent interest compounded monthly?

2. What is the effective annual rate for an investment that pays ten percent interest compounded annually?

3. What is the effective annual rate for the loan shark that charges 45 percent compounded monthly?

4. Your Macy's charge card has a monthly APR of 2.25%. What is the effective annual rate on your outstanding balance?

5. Set up an amortization schedule in good form for a $30,000 loan to be repaid in equal installments over the next five years if the interest rate is six percent annual. What is the total interest paid over the life of the loan? What is the entire principal paid over the life of the loan?

6. What is the payment on a $175,000 mortgage to be repaid monthly over 30 years when the rate is 11.5%?

7. Challenge Problem: You have a loan for $250,000 to be paid monthly over 30 years at an interest rate of 6%. Using your calculator, (a) what is the monthly payment on the loan? (b) What is the total amount of interest to be paid over the life of the loan? (c) What is the interest portion of the 120th payment? (d) What is the principal amount paid in the 210th month?

8. Challenge Problem: You have a friend who plans to go to Blessing Check Cashing to get a payday loan. She tells you that she will postdate a personal check for $130 today, and they will give her $100. In three weeks, she either has to give the check cashing store $130, or they will cash her check. She has asked you to tell her what rate of interest she is paying. Calculate the APR and the EAR.

Reference no: EM132666324

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