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.Prepare an amortization schedule for a fiveyear loan of $71,000. The interest rate is 7 percent per year, and the loan calls for equal annual payments. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Year  Beginning Balance 
Total Payment 
Interest Payment 
Principal Payment 
Ending Balance 
1  $  $  $  $  $ 
2  
3  
4  
5  
How much interest is paid in the third year? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) 
Interest paid  $ 
The interest rate is 7 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loan? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) 
Total interest paid  $ 
8.You are looking at a oneyear loan of $15,500. The interest rate on a oneyear loan is quoted as 11.8 percent plus three points. What is the EAR? (Round your answer to 2 decimal places. (e.g., 32.16))
Effective annual rate  % 
9.
You have 42 years left until retirement and want to retire with $4.8 million. Your salary is paid annually, and you will receive $76,000 at the end of the current year. Your salary will increase at 2.6 percent per year, and you can earn a 10.0 percent return on the money you invest. If you save a constant percentage of your salary, what percentage of your salary must you save each year?(Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))
Percent of salary to save 
% 
10. The Harrington Corporation is considering a change in its cashonly policy. The new terms would be net one period. The required return is 2.0 percent per period.
Current Policy  New Policy  
Price per unit  $  68  $  70  
Cost per unit  $  36  $  36  
Unit sales per month  2,900  ?  
What is the breakeven quantity for the new credit policy? (Round your answer to 2 decimal places. (e.g., 32.16)) 
11. Sache, Inc., expects to sell 1,540 of its designer suits every week. The store is open seven days a week and expects to sell the same number of suits every day. The company has an EOQ of 1,300 suits and a safety stock of 80 suits. Once an order is placed, it takes three days for Sache to get the suits in.

12.
Solar Engines manufactures solar engines for tractortrailers. Given the fuel savings available, new orders for 120 units have been made by customers requesting credit. The variable cost is $9,000 per unit, and the credit price is $11,000 each. Credit is extended for one period. The required return is 1.5 percent per period. If Solar Engines extends credit, it expects that 40 percent of the customers will be repeat customers and place the same order every period forever and the remaining customers will be onetime orders.
Calculate the NPV of the decision to grant credit. (Round your answer to 2 decimal places. (e.g., 32.16)) 
NPV 
$ 
13. Solar Engines manufactures solar engines for tractortrailers. Given the fuel savings available, new orders for 185 units have been made by customers requesting credit. The variable cost is $11,600 per unit, and the credit price is $14,250 each. Credit is extended for one period. The required return is 1.9 percent per period and the probability of default is 15 percent. Assume the number of repeat customers is affected by the defaults. In other words, 30 percent of the customers who do not default are expected to be repeat customers.
Calculate the NPV of the decision to grant credit. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16)) 
NPV  $ 
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