Question
1. Today is Denises 30th birthday and she determines to become a millionaire by age sixty-five. She plant to start saving annually at her 30th
1. Today is Denises 30th birthday and she determines to become a millionaire by age sixty-five. She plant to start saving annually at her 30th birthday for 35 years. She anticipates an annual return of 4.5% on her investments. How much does she need to save annually to be a millionaire at her sixty- five birthday? If she saves monthly for 35 years, how much does she need to save monthly to achieve her goal? (draw a simple time line for this question) (7 points)
2. You borrow a 20-year $189,000 mortgage loan at annual interest rate of 3.98%.
a) What is the monthly mortgage payment for your mortgage (payment is made at the end of each month)?
b) Find the amount of principal paid, interest paid, and the ending balance for the first month.
c) Find the amount of principal paid, interest paid, and the ending balance for the last month (i.e., month 240)
d) If you pay $180 more each month for principal payment in addition to the monthly payment you calculate in part (a), you can pay off the loan in how many years (or months)?
e) If you are allowed to pay bi-weekly, you can pay off the loan in how many years (or months)? (10 points)
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