A bank quotes a stated annual interest rate of 8.00%. If that rate is equal to an effective….
A bank quotes a stated annual interest rate of 8.00%. If that rate is equal to an effective annual rate of 8%, then the bank is compounding interest:
2.Suppose you plan to send your husband to college in 5 years. You expect him to earn two-thirds of him tuition payment in scholarship money, so you estimate that your payments will be $20,000 a year for 5 years. To estimate whether you have set aside enough money, you ignore possible inflation in tuition payments and assume that you can earn 5 percent annually on your investments. How much should you set aside now to cover these payments?
2.Suppose you plan to send your husband to college in 5 years. You expect him to earn two-thirds of him tuition payment in scholarship money, so you estimate that your payments will be $20,000 a year for 5 years. To estimate whether you have set aside enough money, you ignore possible inflation in tuition payments and assume that you can earn 5 percent annually on your investments. How much should you set aside now to cover these payments?
A bank quotes a stated annual interest rate of 8.00%. If that rate is equal to an effective…
