1. (Annuity interest rate) Your folks just called and would like some advice from you. An insurance agent just called them and offered them the opportunity to purchase an annuity for $22,590.90 that will pay them $3,500 per year for 10 years. They don’t have the slightest idea what return they would be making on their investment of $222,590.90. What rate of return would they be earning?
The annual rate of return your folks would be earning on their investment is _____% (Round to the nearest cent)
2. (loan amortization) On December 31 Beth bought a yacht for $50,000. She paid $14,000 down and agreed to pay the balance in 13 equal annual installments that include both the principal and 15 percent interest on the declining balance. How big will the annual payments?
a. On December 31 Beth bought a yacht for $50,000. She paid $14,000 down, how much does she need to borrow to purchase the yacht? $_______ On December 31 Beth bought a yacht for $50,000. She paid $14,000 down and
b. If Beth agrees to pay the loan plus 15 percent compound interest on the unpaid balance over the next 13 years in 13 equal end of the year payments what will those equal payments be? $_____ On December 31 Beth bought a yacht for $50,000. She paid $14,000 down and