Question 1
If a bank pays a5.5% nominal rate, with monthly compounding on deposits, what effective annual rate (EFF%) does the bank pay?
◦
5.35%
◦
5.64%
◦
6.13%
◦
6.59%
Question 2
John and Daphne are saving for their daughter Ellen’s university education. Ellen is now 10 years old and will be entering university 8 years from now (t = 8). University tuition and expenses at City U are currently $15,000a year, but they are expected to increase at a rate of4% a year. John and Daphne expect Ellen to graduate in 4 years. (If Ellen wants to go to graduate school, she will be on her own.) Tuition and other costs will be due at the beginning of each school year (at t = 8, 9, 10, and 11). So far, John and Daphne have accumulated $14,000 in the university savings account. Their long-run financial plan is to add an additional $6,000 at the beginning of each of the next 4 years (at t = 0, 1, 2, and 3). Then they plan to make four equal annual contributions at the end of each of the following five years (t = 4, 5, 6, 7, and 8). They expect their investment account to earn8.5%. How large must the annual payments be at t = 4, 5, 6, 7, and 8 to meet Ellen’s anticipated university costs?
◦
$1,398.37
◦
$1,472.01
◦
$1,569.82
◦
$1,627.16
John Richardson
Hong Kong is a strange situation. A British colony since 1842, it was handed back to China in 1997 a
John Lennon - Working Class Hero
John F. Kennedy, comfortable and assured, was more telegenic than Richard M. Nixon in the 1960 ...
The human eye, a product of 600 million years of evolution (Lamb, Collin, & Pugh, 2007).
In Canada, 2/3 women and over 1/2 of men 55 to 64 years of age are grandparents