Find the numerical value of the following factors using (a) interpolation, (b) the formula, and (c) a spreadsheet function.
1. (F/P, 14%, 62)
2. (A/F, 1%, 45)
A person's credit score is important in determining the interest rate on a home mortgage. According to Consumer Credit Conseling Service, a home owner with a $100,000 mortgage and a 520 credit score will pay $110,325 more in interest charges over the life of a 30-year loan than a homeowner with the same mortgage and a credit score 720. How much higher would the interest rate per year have to be in order to account for this much difference in interest charges, if the $100,000 loan is repaid in a single lump-sum payment at the end of the 30 years?
The energy costs of a company involved in powder coating of outdoor furniture are expected to increase at a rate of $4000 per year. The cost at the end of the next year (year 1) is expected to be $13,000. How many years will it be from now before the equivalent annual cost is $16,000 per year, if interest is 8% per year?