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What is the interest rate implicit in this agreement

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Question - The following situations should be considered independently. FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1.

1. John Jamison wants to accumulate $69,965 for a down payment on a small business. He will invest $35,000 today in a bank account paying 8% interest compounded annually. Approximately how long will it take John to reach his goal?

2. The Jasmine Tea Company purchased merchandise from a supplier for $39,210. Payment was a noninterest-bearing note requiring Jasmine to make six annual payments of $7000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement?

3. San Robinson borrowed $21,000 from a friend and promised to pay the loan in 12 equal annual installments beginning one year from the date of the loan. Sam friend would like to reimbursed for the time value of money at a 9% annual rate. What is the annual payment Sam must make to pay back his friend?

Reference no: EM132819038

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