Question

12.You want to be able to withdraw $30,000 each year for 30 years. Your account earns 6.3% interest.
Round all answers to the nearest cent as needed.

a) How much do you need in your account at the beginning? $

b) How much total money will you pull out of the account? $

c) How much of that money is interest? $

13. You have $300,000 saved for retirement. Your account earns 5.6% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 20 years?
Round your answer to the nearest cent as needed.

14. You want to buy a $17,000 car. The company is offering a 6.1% interest rate for 3 years.
Round your answer to the nearest cent as needed.

a) What will your monthly payments be? $

b) How much interest will you pay over the entire loan period? $

6.You can afford a $450 per month car payment. You've found a 5 year loan at 7.6% interest. How big of a loan can you afford?
Round your answer to the nearest cent as needed.

Answer 1

12. a). The annuity payment formula is P = [r(PV)]/[ 1-(1+r)^-n] where P is the payment, PV is the present value, r is the rate of interest per period and n is the number of periods.

Here, P = $ 30000, r =6.3/100 = 0.063 and n = 30. Hence 30000 = 0.063(PV) /[ (1-(1.063)^-30] or, PV = (30000/0.063) [ (1-(1.063)^-30] = (30000/0.063) * (1-0.159956563) = (30000/0.063)*0.840043436 = $ 400020.68 ( on rounding off to the nearest cent). Thus, $ 400020.68 will be needed at the beginning.

b). The money that will be withdrawn from the account will be 30*$ 30000 = $ 900000.

c). The part of the money withdrawn, which is interest is $ 900000- $ 400020.68 = $ 499979.32.

Please post the remaining questions again, one at a time.