## Info

Calculating Annuity Values Your company will generate \$75,000 in annual revenue each year for the next eight years from a new information database. The computer system needed to set up the database costs \$380,000. If you can borrow the money to buy the computer system at 7.5 percent annual interest, can you afford the new system?

Calculating Annuity Values If you deposit \$1,500 at the end of each of the next 20 years into an account paying 9.5 percent interest, how much money will you have in the account in 20 years? How much will you have if you make deposits for 40 years?

Calculating Annuity Values You want to have \$50,000 in your savings account five years from now, and you're prepared to make equal annual deposits into the account at the end of each year. If the account pays 6.2 percent interest, what amount must you deposit each year?

Calculating Annuity Values Biktimirov Bank offers you a \$35,000, seven-year term loan at 10 percent annual interest. What will your annual loan payment be? Calculating Perpetuity Values The Perpetual Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs \$5,000 per year forever. If the required return on this investment is 9 percent, how much will you pay for the policy?

Calculating Perpetuity Values In the previous problem, suppose the Perpetual Life Insurance Co. told you the policy costs \$58,000. At what interest rate would this be a fair deal?

Calculating EAR Find the EAR in each of the following cases:

 Stated Rate (APR) Number of Times Compounded Effective Rate (EAR) 12% Quarterly