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1)ANC Company is considering the purchase of an equipment
1)ANC Company is considering the purchase of an equipment. The purchase consists of quarterly payments of $37,200 for four years at 7.6 percent interest. What is the present value of this purchase?
A. $509,114.89
B. $587,418.22
C. $514,184.40
2)Today, your grandfather is buying a 10-year, 4.8 percent annuity at a cost of $50,000. The annuity will pay annual payments starting one year from today. What is the amount of each payment?
A. $13,619.19
B. $6,412.49
C. $6,874.70
3)Kobe pays 1% per month in interest on his credit card debt. When his monthly rate is multiplied by 12, the resulting answer is called the:
A. compounded rate.
B. annual percentage rate.
C. effective annual rate.
Expert Solution
1. ANC Company is considering the purchase of an equipment. The purchase consists of quarterly payments of $37,200 for four years at 7.6 percent interest. What is the present value of this purchase?
A. $509,114.89
B. $587,418.22
C. $514,184.40
2. Today, your grandfather is buying a 10-year, 4.8 percent annuity at a cost of $50,000. The annuity will pay annual payments starting one year from today. What is the amount of each payment?
A. $13,619.19
B. $6,412.49
C. $6,874.70
3. Kobe pays 1% per month in interest on his credit card debt. When his monthly rate is multiplied by 12, the resulting answer is called the:
A. compounded rate.
B. annual percentage rate.
C. effective annual rate.
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