Friday, August 7, 2009

Finance Question regarding investing, APR and EPR?

Basima currently has $9,500 at an investment bank. She began investing 8 years ago at 6% Annual Percentage Rate (APR) or quoted rate. About 2 years ago, Basima began her full-time employment and could have contributed a lumpsum amount of $2,300 at the end of year 7 and another lumpsum amount of $3,200 at the end of year 8.



a) How much did Basima invest in this account 8 years ago? (show timeline)



b) If Basima actually contributed those 2 lumpsum amounts at the end of year 7 and 8, what would have been the current value of her account today? (show timeline)



c) Going forward from today, Basima will earn 8% APR for the next 4 years. What is the future value of her investment if her account is currently worth $9,500? (show timeline)



ee) Another local investment bank has offered her an interest rate of 10% APR compounded monthly. Calculate the Effective Annual Rate (EAR) and the Effective Periodic Rate (EPR) if Basima were to invest bi-weekly (every 2 weeks).



Finance Question regarding investing, APR and EPR?school loans





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