Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

a) Compute the present value of this annuities (2.5 points) Monthly payment: $ 1,300 Number of years for payments: 30 Interest rate: 5.5% Present value

a) Compute the present value of this annuities (2.5 points)
Monthly payment:$ 1,300
Number of years for payments:30
Interest rate:5.5%
Present value =
b) Compute the future value of the annuities in part a) (2.5 points)
Future value =
c) Suppose you are buying a car and finance it with a car loan like below (2.5 points)
Car price45,000
Down payment7,000
Number of years5
APR7.50%
What is your monthly payment?
PMT =
d) Suppose you are saving for your retirement. You are 25 years old now and you want to retire when you are 65 years old (2.5 points)
Retirement goal:1,200,000
APR5.0%
How much will you need to save each month in order to meet your retirement goal?
Monthly savings =
e) If your retirement goal is 1,500,000 instead and you still save the same amount each month found in part d), what is the APR you need to earn in order to meet the retirement goal of $1,500,000? (2.5 points)
Rate=APR =
f) If your retirement goal is 1,500,000 and you are able to save $1,200 each month, how many years do you need to have $1,500,000 in your retirement account, assuming APR of 8%? (2.5 points)
Number of periods =months
Number of years =years

Step by Step Solution

There are 3 Steps involved in it

Step: 1

a To compute the present value of the annuity we can use the formula for the present value of an ordinary annuity Present Value Payment 1 1 rn r Where Payment 1300 monthly payment r Monthly interest r... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

More Books

Students also viewed these Finance questions

Question

List f our sourc es of c onflict. (p. 3 62)

Answered: 1 week ago