Part I. (Sentence Correction) All of the following statements are false. Please change the incorrect parts to make them true. DO NOT negate the sentence, unless necessary.
1. The Jones Brothers recently established a trust fund that will provide annual scholarships of $12,000 indefinitely. The fund is an example of annuity due.
2. Anna pays 1.5 percent interest a year, but compounded on a monthly basis, on her credit card account. When the interest rate on that debt is expressed as if it were compounded only annually, the rate would be referred to as the annual percentage rate.
3. Lee pays 1 percent per month interest on his credit card account. When his monthly rate is multiplied by 12, the resulting answer is referred to as the effective annual rate.
4. Unequal payments each year for nine years, such as your medical bills, can be classified as an annuity.
5. Equal payments each year for nine years, such as your auto loan payment, can be classified as a perpetuity.
6. All else equal, the more frequent compounding, the higher the present value.
7. The Men's Warehouse charges 1.6 percent interest per month. The effective annual rate is 19.2 percent, and the annual percentage rate is 20.98 percent.