1)The second national bank of fullerton advertises an APR of 14% compounded mont
ID: 1249764 • Letter: 1
Question
1)The second national bank of fullerton advertises an APR of 14% compounded monthly for student loans. Determine the APY? setup the solution on paper as well as on spreadsheet.2)How much can Wells Fargo lend to developer who will repay the loan by selling first 6 view lots out of 13 lots at $190,000 each 2 year from now? Assume the bank will lend at a nominal 14% per year, compounded semiannually.
3) Irvine Aerospace of Santa Ana, California, was awarded a 5 year contract to develop an advanced space capsule airbag landing attenuation system for NASA's Langley research Center. The company's computer system uses fluid structure interaction modeling to test and analyze each airbag design concept. What is the present worth of the concept at 16% per year, compounded quarterly, if the quarterly cost in years 1 through 5 is $2million per quarter?
Explanation / Answer
APY is calculated with the following equation- APY = [1 + (APR/n)]^n-1, where n is the number of times it is being compounded annually. since we know that the APR is 12% and that it is being compunded 12 times per year we can find the APY. APY= [1 + (.12/12)]^12-1. first we divide .12 by 12 APY= [1 + (.01)]^12-1. next we deal with the bracket and add 1 and .01 APY= (1.01)^12-1. Now we take the 1.01 to the 12th power. APY= 1.1268-1. Now we subtract the remaining to get our APY APY=.1268 please limit yourself to one question per post please and thank you
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