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?

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?

Solutions

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 1 year ago

Next > < Previous

Related Solutions

If you deposit $3700 today into an account earning an annual rate of return of 11...

If you deposit $3700 today into an account earning an annual rate of return of 11 percent, what would your account be worth in 30 years (assuming no further deposits)? In 35 years?

Today you are going to put $45,000 into an investment. You expect to earn

Today you are going to put $45,000 into an investment. You expect to earn an APR (based on quarterly compounding) of 7.16%. How much will you have in the account in exactly 8 years? To nearest $0.01.

1. You are going to deposit $850 in a bank CD today, and you will withdraw...

1. You are going to deposit $850 in a bank CD today, and you will withdraw the money only once the balance is $1,000. If the bank pays 9 percent interest, how long will it take for the balance to reach $1,000? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to 1 decimal place, e.g. 5.4.) Balance will reach $1,000 in years

If you can earn 7.5 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal?

You want to have $50,000 for a down payment on a house 5 years from now. If you can earn 7.5 percent, compounded annually, on your savings, how much do you need to deposit today to reach your goal?Group of answer choices$35,133.35$34,827.93$34,677.70$33,989.16$32,886.33

Assume you deposit $1,000 every month at a 6 percent annual rate, compounded monthly. How much...

Assume you deposit $1,000 every month at a 6 percent annual rate, compounded monthly. How much will you have at the end of 3 years? Round to the nearest dollar.

Tai Credit corp wants to earn an effective annual rate of 17.5 percent. The bank uses...

Tai Credit corp wants to earn an effective annual rate of 17.5 percent. The bank uses daily compounding on its loans. What is the interest rate that the bank is required to charge its potential borrowers (hint: APR).

Cash flows are end-of-period Suppose that you purchased a bond with a 4.9 percent coupon rate...

Cash flows are end-of-period Suppose that you purchased a bond with a 4.9 percent coupon rate for $930 today. The bond matures in ten years and makes semiannual coupon payments. a. What rate of return, expressed as an APR, do you expect to earn on your investment if you plan to hold it until maturity? b. Two years from now, the yield-to-maturity on your bond has declined by 1 percentage point, and you decide to sell. How much will you...

You deposit today $3100 dollars in an account that pays 4.8 percent per year. For the...

You deposit today $3100 dollars in an account that pays 4.8 percent per year. For the next few years you will keep making deposits 7.1 percent larger than the previous one. What will be the balance on the account after 15 deposits. I feel like I am missing the annuity to solve this problem, but I could be wrong.

You invest $10,000 today into a retirement account. You expect to earn 11 percent, compounded monthly,...

You invest $10,000 today into a retirement account. You expect to earn 11 percent, compounded monthly, on your money for the next 25 years. After that, you want to be more conservative, so only expect to earn 7 percent, compounded semi-annually. How much money will you have in your account when you retire 40 years from now, assuming that this is the only deposit you make into the account? A. $443,908 B. $397,062 C. $441,387 D. $483,928 E. $433,590

If you deposit money today in an account that pays 15.0% annual interest, how long will...

If you deposit money today in an account that pays 15.0% annual interest, how long will it take to double your money?

Subjects