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#1




FM2 Problem
A loan of 12 is to be repaid with payments of 10 at the end of 3 years and 5 at
the end of 6 years. Calculate the simple discount rate that is being charged on the loan. I did: 10/(1+3x) + 5/(1+6x) = 12 i = 6.405%. Should be pretty straightforward. But Finan's book says 5%. Where did I go wrong?
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#2




10 * (13x) + 5 * (16x) = 12
Discount, not interest rate. It's been forever since I've done these. Hope that's right. 
#4




Q. Find the present value of an annuity which pays $200 at the end of each
quarter−year for 12 years if the rate of interest is 6% convertible quarterly. My answer: 200 x An An= 11/(1.015)^48 / 0.0146738 (which is nominal i4). The answer on the book is based on effective rate/4 = i/4 = 0.015 Can anyone please explain why it is using nominal 1.015^4 = 1.0614 instead of 1.06 on top but effective rate of i/4 at the bottom? Thanks!
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#5




6% is the nominal, not the effective rate. You are working in quarters so the effective rate per quarter is 1.5%.

#7




Q: Smith borrows $5,000 on January 1, 2007. He repays the loan with 20 annual payments, starting January 1, 2008. The payments in evennumber year are 2X each; the payments in oddnumber years are X each. If d = 0:08; find the total amount of all 20 payments? I have seen some problems but
I did it by considering two separate payment streams. One of X for each year at i= 1/(10.08)  1 = 0.086956 Another one every two years of X at j = (1+i)^21 = 0.18147 X a(20i) + X a(10j) = 5000 a(20i) =9.330 a(10j) = 4.47064 Solving, X = 362.301 Total = 362.301 x 30 = 10869.03 Answer on the book = 10571.40 I looked up similar problems online, but can't seem to figure out. Where did I go wrong?
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#9




Quote:
So, if I want to move it by 2 years, then it will be multiplying by (1+j)?
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