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Some home loans involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1% of the loan amount as a fee. For example, if 0.5 point is charged on a $100,000 loan, the loan repayment schedule is calculated on the $100,000 loan, but the net amount the borrower receives is only $99,500. What is the effective annual interest rate charged on such a loan, assuming that loan repayment occurs over 360 months, and that the interest rate is 1% per month?
111. In 1973 Gordon Moore, one of Intel's founders, predicted that the number of transistors that could be placed on a single silicon chip would double every 18 months, equivalent to an annual growth of 59% (i.e., 1.591.5 = 2.0). The first microprocessor was built in 1971 and had 2,250 transistors. By 2003 Intel chips contained 410 million transistors, over 182,000 times the number 32 years earlier. What has been the annual compound rate of growth in processing power? How does it compare with the prediction of Moore's law?
112. How should we compare interest rates quoted over different time intervals—for example, monthly versus annual rates?
113. Discuss the statement, "It is always preferred to select an account that offers compound interest over an account that offers simple interest."
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