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The Time Value of Money, Annual Payments and Interest Rates

1. How much will my annual payments be on a $15,000 loan at 12% interest, to be paid off in 4 years?

2. How much will my monthly payments be on a $15,000 loan at 12% interest, to be paid off in 4 years?

3. How long will it take me to save $13,816.45 if I make annual payments of $1,000 at 7%?

4. Which of the following provides the greatest effective annual interest rate?
(a) 9% compounded annually?
(b) 8.5% compounded quarterly?
(c) 8% compounded monthly
(d) 7.5% compouned daily

5. How much must I pay into my 6% savings account at the beginning of each month to have
$25,000 in 4 years?

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Solution Summary

This solution shows step-by-step calculations in an Excel sheet to determine the interest of loan payments, annual payments, and situations that provide the greatest effective interest rate.

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