5. Suppose a CD (Certificate of Deposit) advertised an APR of 8%. Assuming the APR was the result of monthly compounding, find the effective annual yield to the nearest tenth of a percent. 8. The going rate for a home mortgage with a term of 30 years is 3.8%. The lending agency says that based on your income, your monthly payment could be $900. How much can you borrow? 9. Suppose you invest $5,000 in a savings account that pays an APR of 4%. If the interest is compounded quarterly, what is the balance in the account after 10 years? How much interest is earned? 10. You begin your retirement savings at age 22. You plan on retiring at age 65. How much will you need to deposit each month into a savings account with an APR of 9% compounded monthly if your goal is to save $1,000,000? How much interest will you earn? Financial Formula Flowchart Is the interest compounded? NO Simple Interest I = Prt A = P(1+rt) YES Compound Interest rint A Are regular payments being made? 1 = P(1+5)" NO Continuous Compounding A = Pert YES Present Value PMT (1-(1+5)*] NO PE Will there be money in the account at the end of the time period P PMT = [1 (1 + 7) * YES Future Value PMT|(1 +1)" - 1 A= A PMT - +