Question

Complete the following problems using either a financial calculator or a spreadsheet program. Do not use interim rounding, state your answers as positive values, to two decimal places for dollar or period values and four places for percentages stated as decimals; do not label answers with symbols such as $ or %. For example, “10.5%” should be input as “.1050”

1. Jacinda Herschel wants to buy a car and determines she can afford to pay $295.02 a month for a 3 year loan. The rate on such a loan is 0.0598. How much money can Jacinda borrow?

2.Seamus McIntyre started saving for retirement today by investing $241 in an account earning 0.0888. He plans to continue with monthly contributions of the same amount for 32 years. The present value of his investment is:

Answer 1

1. Per month payment =295.01
Rate per month =0.0598/12
Number of Months =12*3 =36
Money Jacinda can borrow using financial calculator
I/Y=0.0598/12;N=36;PMT=295.02;CPT PV =9700.17
Money Jacinda can borrow =9700.50

2.. Monthly investment =241
Number of Periods =32*12 =384
Rate per month =0.0888/12
PV of this investment using financial calculator
I/Y =0.0888/12,N=384;PMT=-241;CPT PV =30647.85
PV of his investment =30647.85