8. You get a $12,000 bonus annually. You plan to save it for your first home down payment in three years.

(LO 4-3)

a. Which formula will you use to determine how much you will have for a down payment?

(1) PMT({1 − [1/(1 + i)n]}/i)

(2) PMT{[(1 + i)n − 1]/i}

(3) PMT{[(1 − i)n − 1]/i}

(4) PMT[(1/1 + i)n/i]

b. If you decided to compute the value using the reference table method, what factor would you use if you were earning a 3% interest rate annually?

(1) 3.091

(2) 2.829

(3) 0.915

(4) 1.093

c. Using a calculator, which values would you use to solve for FV?

(1) N = 3; I/YR = 3; PV = 12,000; PMT = 0

(2) N = 3; I/YR = 3; PV = 0; PMT = 12000

(3) N = 3; I/YR = 3; PV = −12,000; PMT = 0

(4) N = 3; I/YR = 3; PV = 0; PMT = −12,000

d. How much will you have as a down payment in three years?

(1) $38,828.60

(2) $36,915.10

(3) $37,090.80

(4) $37,092.70