8.1.2

You deposit $1000 each year into an account earning 7% interest compounded annually. How much will you have in the account in 25 years? $___.

Suppose you want to have $400,000 for retirement in 25 years. Your account earns 7% interest.

a) How much would you need to deposit in the account each month? $___.

b) How much interest will you earn? $___.

A man wants to set up a 529 college savings account for his granddaughter. How much would he need to deposit each year into the account in order to have $50,000 saved up for when she goes to college in 15 years, assuming the account earns a 6% return. Annual deposit: $___.

A business sets up a sinking fund so they will have a $72,000.00 to pay for a replacement piece of equipment in 11 years when the current equipment will be sold for scrap. If they make deposits at the end of each month for 11 years in the investment that pays 6.9% compounded monthly, what size should each payment be? The monthly payments are $___. (Round to 2 decimal places.)

How much would you need to deposit in an account each month in order to have $10,000 in the account in 5 years? Assume the account earns 8% interest. $___.

8.3.4

You have $300,000 saved for retirement. Your account earns 9% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 20 years? $___.

You want to be able to withdraw $35,000 each year for 15 years. Your account earns 7% interest.

a) How much do you need in your account at the beginning? $___.

b) How much total money will you pull out of the account? $___.

c) How much of that money is interest? $___.

You want to buy a $30,000 car. The company is offering a 5% interest rate for 60 months (5 years). What will your monthly payments be? $___.

A young executive is going to purchase a vacation property for investment purposes. She needs to borrow $111,000.00 for 26 years at 6.3% compounded monthly, and will make monthly payments of $724.10. (Round all answers to 2 decimal places.)

a) What is the unpaid balance after 14 months? $___.

b) During this time period, how much interest did she pay? $___.

You owe $27,000 on student loans at an interest rate of 5.6% compounded monthly. You want to pay off the loan in 10 years.

a) What will your monthly payments be? $___.

b) How much interest do you pay? $___.

You want to buy a $135,000 home. You plan to pay 15% as a down payment and take out a 30 year loan at 4.6% interest for the rest.

a) How much is the loan amount going to be? $___.

b) What will your monthly payments be? $___.

c) How much of the first payment is interest? $___.