5. If the nominal rate of interest is 3.2%, then what is the quarterly periodic rate of interest? . Show 2 decimals in the percentage! Don't enter the % sign. For Example answer: 9.99

7. A perpetuity has a discount rate of 6.7% and a payment of \$421.22. What is the present value of this perpetuity?

8. You borrow \$76,810 to be repaid in annual payments over 6 years. The nominal interest rate on the loan is 9.2%. Based on the above how much should the annual payment should be? (Show pennies!) e.g. 99.99

Periodic Quarterly rate = Nominal rate/Number of quarters in a year

= 3.2%/4

= 0.8%

7.Present value of perpetuity = Annual payment/Discount rate

= 421.22/6.7%

= \$6,286.87

8.Annual payment = Amount of Loan/PVAF(9.2%, 6 years)

= 76810/4.4593

= \$17,224.7

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