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Calculating: present value, investments with interest compounded quarterly, monthly payment on mortgage, interest rate and expected value of investment

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1. Find the present value of $2000 to be received 2 years from now discounted at 3% semiannually.

2. How many years will it take to triple your money in an investment that pays 7% interest compounded quarterly?

3. What is the monthly payment on a $150,000, 30-year mortgage at a 6.5% interest rate?

4. If you borrow $2000 and pay back $2600 in 5 years, what annual interest rate are you paying?

5. If you invest $12,000 at an expected return of 4% compounded quarterly, what be the value of your investment in 6 years?

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1. Find the present value of $2000 to be received 2 years from now discounted at 3% semiannually.

First of all if the interest compound or discounted semiannually we have to multiply N with 2 and divide interest rate to 2; if it would be quarterly we would do the same calculations with 4

N= 2x2 = 4 I/YR= 3/2 = 1.5

Thus Using HP 10 b or Texas Instruments BA II Plus financial calculator (same) if we enter: ...

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Umut Oltulu, MBA
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  • BSc, Dokuz Eylul University
  • MBA, Texas A&M University-Kingsville
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