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Pg. 282 Homework

Pg. 282 Homework. Worksheet #4 – 6 Pg . 268 #15 – 18, 29, 41, 47 – 49 #1 6% quarterly #2 8.25% monthly #3 7.20% daily #4 8.5% quarterly #5 $36,013.70 #6 $13,937.28 #7 x = $749.35 #15 R = $230.43 #16 R = $151.62 #17 R = $884.61 #18 R = $1,032.14.

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Pg. 282 Homework

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  1. Pg. 282 Homework • Worksheet #4 – 6 Pg. 268 #15 – 18, 29, 41, 47 – 49 • #1 6% quarterly #2 8.25% monthly • #3 7.20% daily #4 8.5% quarterly • #5 $36,013.70 #6 $13,937.28 • #7 x = $749.35 #15 R = $230.43 • #16 R = $151.62 #17 R = $884.61 • #18 R = $1,032.14

  2. 5.3 Effective Rates and Annuities Effective Annual Rate Ordinary Annuity An ordinary annuity is a sequence of equal regular periodic payments to be made in the future. Future Value is like when people invest into a retirement account. Present Value is like when people make mortgage or car payments. • The effective annual rate basically is an equation that breaks down a percentage and compounding into uniformed terms, so you can easily compare two and see which will yield better results. • Effective Annual Rate = ieff of APR r compounded k times per year.

  3. 5.3 Effective Rates and Annuities Examples: Sarah makes quarterly payments of $500 into a retirement account that pays 8% compounded quarterly. How much will be in Sarah's account at the end of 25 years? • Compare the effective annual rates of an account paying 8.75% compounded quarterly with an account paying 8.75% compounded monthly.

  4. 5.3 Effective Rates and Annuities Examples Solve the following equation for I using a graphing utility.Explain how this problem relates to a car loan of $10,000 requiring monthly payments of $200. • What monthly payments are required for a 5 – year, $9,000 car loan at 12.5% APR compounded monthly?

  5. 5.3 Effective Rates and Annuities • A building, item of equipment, or other capital improvement investment that a business might make has a useful life. The item depreciates from the time it is new (original cost C) until it reaches the end of its useful life (salvage value S). A continuous model for book value B at any time t using the constant percentage method:B = C(1 – r)t where S = C(1 – r)n , 0 ≤ t ≤ n

  6. 5.3 Effective Rates and Annuities • Suppose a machine costing $17,000 has a useful life of 6 years and a salvage value of $1,200. • Assume that the machine is depreciated using the constant percentage method to find r. • Draw a complete graph of the book value. • What values of t make sense? • What is the book value in 4 years and 3 months?

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