Logically and mathematically reason out the solution, and formulate computer-based models to solve the problems (Computer model Optional);
a. Warren borrowed $14,000 on a noninterest-bearing, simple discount, 4.5% 60 day note. Assume ordinary interest.
What are:
i. The maturity value,
ii. Bank’s discount,
iii. Warren’s proceeds,
iv. Effective interest rate to the nearest 100th?
b. Lionel deposits $7,000 in Victory bank, which pays 4% interest compounded semiannually. How much will Lionel have in his account at the end of 8 years?
c. Find the effective rate (APY) for the year given the principal = $8,000, interest rate = 6% and compounded quarterly. Round to the nearest 100th.
d. Bill needs $40,000 6 years from now to attend college. How much must Bill put in the bank every three months (8% compounded quarterly) to reach his goal?
e. Bob wants to buy his grandson a Ford Taurus in 4 years. The cost of the car is $28,000. Assuming a bank rate of 4% compounded quarterly, how much must Bob put in the bank quarterly?
f. Bernie wants to retire to California when she is 60 years of age. Bernie is 40 now. She believes that she will need $900,000 to retire comfortably. To date, Bernie has set aside no retirement money. If Bernie gets 8% compounded semiannually, how much must she invest today to meet her $900,000 goal?