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3c. The organization threw in a new twist regarding the scholarship. In addition to the previous offer (options 1 and 2): 4. 5. 6.
3c. The organization threw in a new twist regarding the scholarship. In addition to the previous offer (options 1 and 2): 4. 5. 6. 7. 1) $30,000 five years from now, or 2) $25,000 today They are offering to pay you an annuity (option 3): 3) $9,000 today and $4,000 each year for the next five years. Hint: this implies they will make payment of 4,000 per year and you can invest that $9,000. Since the compounding period is monthly, you might want to convert the yearly PMT to monthly. The interest rate for this new offer is still 3.5% each year compounded monthly. Which choice provides the most money at the end of five years: 1, 2 or 3? In cell M12 of the sample sheet on the last page of this exercise, the value of the annuity is provided. You need to write the formula to calculate the value of this annuity. Cell N12 contains an IF statement to make the determination on what choice to make with the organization. The IF statement should check whether the annuity is larger than the maximum of options 1 and 2 (using the MAX function). If the annuity is larger, print "Take the annuity", otherwise print whatever is in cell J10 (the answer to question 3b). Time for a new problem. You want to borrow $200,000 at 4% interest compounded monthly. If you can afford to make monthly payments of only $1200/month, how many months (cell M14 on the sample output) will it take you to pay off the loan completely? How many years (cell N14 on the sample output)? Assume the same data as provided in question # 4. How much would you have to pay each month to pay off the loan in 10 years? Assume the same data as provided in question #5 (borrow $200,000, interest is 4% compounded monthly loan period is 10 years, payments are $2024.90/month). a) How much interest in total will you pay for this loan over the full 10 years? b) How much of your very first monthly payment will go towards interest? c) How much interest will you pay in the first year of this loan? d) How much will you pay towards principal the first year of the loan? Calculate the total monthly payment: You want to buy a house that costs $250,000, you have $25.000 for a down payment, loan rate interest is 3.5% a year compounded monthly and you plan to get a 25-year loan with a balloon payment of $30,000. Insurance costs $450/year and property taxes are 8% a year of the assessed value of the house. The assessed value is $120,000.
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