EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Chapter 14A.2, Problem 1MQ
To determine
Importance of each term of equation
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A person purchased a new car for $26,200 and financed the entire amount. Suppose that the person can only afford to pay $200 per month. Assume that the payments are made at a continuous annual rate and that interest is compounded continuously at the rate of 8%.
(a) Set up a differential equation that is satisfied by the amount f(t) of money owed on the car loan at time t.
(b) How long will it take to pay off the car loan?
...
(a) Let y = f(t) where t is the number of years after the car is purchased. Set up a differential equation that is satisfied by the amount f(t) of money owed on the car loan at time t.
%3D
y' =, y(0) =
%D
(b) It will take
years to pay off the car loan.
(Round to the nearest hundredth as needed.)
FIN301 Copyright © 2020 Singapore University of Social Sciences (SUSS) Page 5 of 5Timed Online Assignment – July Semester 2020(a) Suppose Jack can get a 2% interest rate for a 6 month USD deposit, solve for the interest rate for a 6 month SGD deposit so that Jack will be indifferent to exchanging the USD now or in 6 months’ time. (Note: The 2% is not an annual rate but is applicable for the 6-month period.)
(b) Suppose Jack decides not to use the forward market to hedge the exchange rate risk but use the futures market instead. Explain one (1) advantage and one (1) disadvantage of using each method.
1. How much is the total value of all these presents worth today?2. How much is the future value of all these presents at the end of 12 years?3. If Tita Rhea agrees to give her these amounts annually forever, how much is its total value worth today?4. If the presents are each made continuously throughout the year at a rate of P, multiply the present value in #7 by a suitable adjustment factor (d/δ) to determine its total present value. Type the resulting amount below.
Chapter 14A Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
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