# Intermediate calculations

Intermediate calculations Student Help

1.
If you take out an \$7,100 car loan that calls for 36 monthly payments starting after 1 month at an APR of 9%, what is your monthly payment? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Monthly payment
\$

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b.
What is the effective annual interest rate on the loan? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Effective annual interest rate
%

2. Professor’s Annuity Corp. offers a lifetime annuity to retiring professors. For a payment of \$79,000 at age 65, the firm will pay the retiring professor \$575 a month until death.

a.
If the professor’s remaining life expectancy is 20 years, what is the monthly rate on this annuity? What is the effective annual rate? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Monthly rate on annuity
%

Effective annual rate
%

b.
If the monthly interest rate is 1%, what monthly annuity payment can the firm offer to the retiring professor? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Monthly annuity payment
\$

In mid-2010 a pound of apples cost \$1.16, while oranges cost \$1.00. Ten years earlier the price of apples was only \$.87 a pound and that of oranges was \$.65 a pound.

a.
What was the annual compound rate of growth in the price of the two fruits? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Annual

Compound rate growth for apples
%

Compound rate growth for oranges
%

b.
If the same rates of growth persist in the future, what will be the price of apples in 2030? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price of apples in 2030
\$

c.
What about the price of oranges? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Price of oranges in 2030
\$

4.

A factory costs \$410,000. You forecast that it will produce cash inflows of \$125,000 in year 1, \$185,000 in year 2, and \$310,000 in year 3. The discount rate is 11%.

a.
Calculate the PV of cash inflows. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Present value
\$

b.
Is the factory a good investment?

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