1. Suppose you borrow $40,000 from a bank. The terms of the loan are 10 years with an interest rate of 14%. What are the annual loan payments at the end of the year to the bank?
Enter your response below (rounded to 2 decimal places).
2. If the nominal interest rate is 9.6% and the inflation rate is 2.7%, what is the real interest rate? Enter your answer as a percentage.
Enter your response below (rounded to 2 decimal places).
3. An investment promises to pay you $10,000 per year forever with the first payment at time 1. If alternative investments of similar risk earn 6.88% per year, determine the maximum you would be willing to pay for this investment.
Enter your response below (rounded to 2 decimal places).
4. If the annual percentage rate (APR) is 6% and the compounding period is daily, what is the effective annual rate (EAR)? Enter your answer as a percentage. Do not include the percentage sign in your answer. Do not round the decimal number after you have performed the division of the interest rate.
Enter your response below (rounded to 2 decimal places).