Question

A)You have just taken a 30-year mortgage loan for $260,000. The annual percentage rate on the loan is 4.25%, and payments will be made monthly. Estimate your monthly payments. Assume compounding is monthly. Prepare an amortization table.

B) At age 30, Susan starts investing $18,000 per year with the investments at the end of each year. She does this for 9 years. She never invests any more but she leaves this money in the no-load mutual fund. The fund earns 8% per year. Calculate the value of the fund when Ann is 65. Assume compounding is annually.

C) For question B above, assuming Ann makes equal withdrawals from her retirement account at the end of each year from age 65 to age 85, how much does she withdraw to bring the fund to zero?

Answer 1

A: Monthly payment =1279.04 (Due to space constraint posting, first 10 and last 10 payments)

Month	StartingBalance	Interest	Principal	EndingBalance	TotalInterest
1	$260,000.00	$920.83	$358.21	$259,641.79	$920.83
2	$259,641.79	$919.56	$359.48	$259,282.31	$1,840.40
3	$259,282.31	$918.29	$360.75	$258,921.56	$2,758.69
4	$258,921.56	$917.01	$362.03	$258,559.53	$3,675.70
5	$258,559.53	$915.73	$363.31	$258,196.22	$4,591.44
6	$258,196.22	$914.44	$364.60	$257,831.62	$5,505.88
7	$257,831.62	$913.15	$365.89	$257,465.73	$6,419.03
8	$257,465.73	$911.86	$367.19	$257,098.54	$7,330.89
9	$257,098.54	$910.56	$368.49	$256,730.06	$8,241.45
10	$256,730.06	$909.25	$369.79	$256,360.26	$9,150.70

351	$12,544.78	$44.43	$1,234.61	$11,310.17	$200,254.51
352	$11,310.17	$40.06	$1,238.99	$10,071.18	$200,294.57
353	$10,071.18	$35.67	$1,243.37	$8,827.80	$200,330.24
354	$8,827.80	$31.27	$1,247.78	$7,580.02	$200,361.50
355	$7,580.02	$26.85	$1,252.20	$6,327.83	$200,388.35
356	$6,327.83	$22.41	$1,256.63	$5,071.19	$200,410.76
357	$5,071.19	$17.96	$1,261.08	$3,810.11	$200,428.72
358	$3,810.11	$13.49	$1,265.55	$2,544.56	$200,442.21
359	$2,544.56	$9.01	$1,270.03	$1,274.53	$200,451.22
360	$1,274.53	$4.51	$1,274.53	$0.00	$200,455.74

WORKINGS

B	Value of fund at 65	$3,101,702.47
C	Amount of withdrawal	$315,915.25