Annuity | Assignment | New

Part A
Q1.
A = 3000, r = 9.5 % , n =12, PMT = 100
A= PMT * (1+ APR
n )nY
−1
( APR
n )
Taking log and solving for y we have
Y = 34 months
Q2.
P = 5500 , r = 7.2% , n = 12 , Y = 2
PMT = ( P∗r
n )/ [1−(1+ r
n )−nY
]
Monthly payment = $246.75
Q3.
A = 7500, r = 9.6 , n = 12, y = 1 , y = 5
PMT = ( P∗r
n )/ [ 1−( 1+ r
n )
−nY
]
PMT| y = 1 = $ 657.97
PMT | y = 5 = $ 157.88
Difference in the two monthly payments: (657.97 – 157.88) = $500.09

Q4.
A = 7500, r = 9.6 , n = 12, y = 2
PMT = ( P∗r
n )/ [1−(1+ r
n )−nY
]
PMT| y = 2 = $ 344.70
Total Interest paid = 344.7 *12*2 – 7500 = $772.8
Q5.
A = 1800, r = 8.4 , n = 12, y = 1 , y = 5
PMT = ( P∗r
n )/ [ 1−( 1+ r
n )
−nY
]
PMT| y = 1 = $ 156.91
PMT | y = 5 = $ 36.84
Difference in the total interest paid on the two loans : (36.84*12*5-1800)- (156.91*12-1800)
= $327.48
Q6.
R = 7.5 %, P = 18000, PMT =500 n =12,
PMT = ( P∗r
n )/ [1−(1+ r
n )−nY
]
Taking log and solving for Y

Y = 3.41 years = 41 months (approx.)
Q7.
R = 7.5 %, P = 18000, PMT =400 n =12,
PMT = ( P∗r
n )/ [1−(1+ r
n )−nY
]
Taking log and solving for Y
Y = 4.41 years = 53 months (approx.)
Total interest paid: 53* 400 – 18000 = $ 3200
Q8.
A= 17000, r = 5.5 %, n =12 , y = 5
PMT = $32.47
Q9.
A= 17000, r = 6.5 %, n =12, y = 5
Monthly payment: 33.26
A= 17000, r = 9.5 %, n =12, y = 5
Monthly payment : 35.70
Difference between the monthly payments: $2.44
Q10.