Question

Use EXCEL (show Excel functions) to determine the following:

1. Ty bought a new car for $25,000. He put $2,000 down and financed the rest with the dealer who had a special offer of 2% interest for 60 monthly payments. How much will Ty pay each month?

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2. Twins Taylor and Tanner both received $1,000 from their grandmother for their birthday. She told them they had to save it for 5 years. Taylor found an account paying 4.5% with monthly compounding. Tanner elected an account paying 5% with annual compounding. Who will have more at the end of the five years?

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3. Piper has $300,000 for her retirement. She is considering investing in a 20-year, 7% annuity and is trying to determine whether she should take the payments quarterly or monthly. Under which method would she get the most money each year?

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4. Twins Kate and Allie will be going to college in 15 years. Their parents have decided that Dad will start a savings fund for Kate. He will deposit $2,000 into an account the first of each year. That account earns 7% and interest is compounded annually. Their mother will also deposit $2,000 into an account for Allie, but she is going to make those deposits at the end of each quarter and the account pays 7.5% compounded quarterly. Who will have more in her college fund?

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Answer 1

Calculation for each part is shown below

The formula's are given below