Question

In: Finance

1) A.Starting today, Nina is planning to invest at the beginning of each year for 6...

1)

A.Starting today, Nina is planning to invest at the beginning of each year for 6 years. Nina will earn is an annual 6.50%return on her investment. How much money would the investment be worth in today’s dollars?

B. Nina is looking for a sofa for $7800 and the credit terms are 3 years at an annual interest rate of 6.8%. If you purchase the sofa on credit and make each payment every month, how much will you have to pay each term?

Inflation isn't told in these problems

Expert Solution

A. Starting today, Nina is planning to invest at the beginning of each year for 6 years. Nina will earn is an annual 6.50%return on her investment. How much money would the investment be worth in today’s dollars?

Let's say Nina invests $200 every year

Present value of an annuity due

The investment is worth $1,031.1358876246 in today's dollars.

B. Nina is looking for a sofa for $7800 and the credit terms are 3 years at an annual interest rate of 6.8%. If you

purchase the sofa on credit and make each payment every month, how much will you have to pay each term?

Monthly interest rate, r = 0.068/12 = 0.005666666667

Number of monthly payments, n = 3 * 12 = 36

Nina will have to pay $240.1287402245 each term

jeff jeffy answered 2 years ago

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