In: Finance
40 years ago, Monica had a balance of $10,000 in her supply account. Today, after making annual contributions for 40 years, Monica has $1,000,000 in the same account. If the account earned annual interest of 8%, how much did she contribute to the account each year?
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Linda is thinking of using Apple Pay to pay her rent, which is $2,100 a month due at the beginning of each month starting today. She is going to put a lump sum of money in a savings account today that will cover her rent for a year. If she earns an APR of 1.8% on the account, how much does she have to deposit into the account?
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1) | $ 3,021.56 | ||||||||||
Working: | |||||||||||
Annual contribution | =-pmt(rate,nper,pv,fv) | ||||||||||
$ 3,021.56 | |||||||||||
Where, | |||||||||||
rate | = | 8% | |||||||||
nper | = | 40 | |||||||||
pv | = | $ -10,000 | |||||||||
fv | = | $ 10,00,000 | |||||||||
2) | $ 24,993.44 | ||||||||||
Working: | |||||||||||
Present Value of rental payment | =pv(rate,nper,pmt,fv,1) | Where, | |||||||||
$ 24,993.44 | rate | = | 1.8%/12 | = | 0.0015 | ||||||
nper | = | 1*12 | = | 12 | |||||||
pmt | = | $ -2,100.00 | |||||||||
fv | = | 0 | |||||||||
3) | $ 2,326.25 | ||||||||||
Working: | |||||||||||
Value of loan now | =-fv(rate,nper,pmt,pv,1) | Where, | |||||||||
$ 2,94,166.03 | rate | = | 5% | ||||||||
nper | = | 4 | |||||||||
pmt | = | $ 65,000.00 | |||||||||
pv | = | 0 | |||||||||
Monthly Payment | =-pmt(rate,nper,pv,fv) | Where, | |||||||||
$ 2,326.25 | rate | 5%/12 | = | 0.004166667 | |||||||
nper | 15*12 | = | 180 | ||||||||
pv | = | $ 2,94,166.03 | |||||||||
fv | = | 0 | |||||||||
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