Self Check Answers

1. $\text{\$}3000\times 0.0429\times 0.25=\text{\$}32.18$ , rounded up
2. $\text{\$}20,000\times {\left(1.010725\right)}^2\approx \text{\$}20,431.30$
3. $449.04
4. $261.03
5. $215.57 payment; $934.20 interest
6. $21,000
7. No. For example, if the loan is at 0%, then three- quarters of it will be paid off after three-quarters of the term.
8. $1800 interest; $187.50 payment; 11.4% APR
9. No
10. 2.91% APR; 2.95% EAR
11. $195.30
12. One reason is that because of inflation, the value (purchasing power) of a level payment would decline over the 25 or 30 years of the term of the annuity.
13. $947,262.41