a)You are going to deposit $23,000 today. You will earn an annual rate of 4.9 percent...

a)You are going to deposit $23,000 today. You will earn an annual rate of 4.9 percent for 11 years, and then earn an annual rate of 4.3 percent for 14 years. How much will you have in your account in 25 years?

b)

You have decided to buy a car that costs $27,400. Since you do not have a big down payment, the lender offers you a loan with an APR of 6.09 percent compounded monthly for 7 years with the first monthly payment due today. What is the amount of your loan payment?

c)What is the future value of $2,875 per year for 22 years at an interest rate of 6.93 percent?

Expert Solution

a)You are going to deposit $23,000 today. You will earn an annual rate of 4.9 percent for 11 years, and then earn an annual rate of 4.3 percent for 14 years. How much will you have in your account in 25 years?
Present Value	$23,000.00
Rate	4.90%
Period	11
Future Value = $23000 x (1 + 4.90% ) ^11	$38,927.65

Present Value	$38,927.65
Rate	4.30%
Period	14
Future Value = $38927.65 x (1 + 4.30% ) ^14	$70,184.07

b)
You have decided to buy a car that costs $27,400. Since you do not have a big down payment, the lender offers you a loan with an APR of 6.09 percent compounded monthly for 7 years with the first monthly payment due today. What is the amount of your loan payment?
Loan = PV	$27,400.00
Rate = 6.09%/12	0.51%
Period = 7 x 12	84	months
Type	1
Monthly Payment = PMT(0.51%,84,-27400,0,1)	$399.43

c) What is the future value of $2,875 per year for 22 years at an interest rate of 6.93 percent?
PMT	$2,875.00
Rate	6.93%
Period	22
Future value = FV(6.93%,22,-2875)	$139,687.38

jeff jeffy answered 2 years ago

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