Future Value of an Annuity

You just turned 12 and you want $40,000 for college at the end of your 17th year. If you are to deposit the same amount at the end of each year of your age into a risk-free account with a 5% annual interest rate, compounded annually, how much should you invest each year?

FV and PV of an Annuity

Suppose you expect to live for 20 years after retiring at age 65. You would like to save enough money to have $30,000 per year to live on during your retirement. Currently, at age 30, you would like to start saving a fixed amount each year to fund this retirement plan. How much do you need to save each year to reach your goal? (Assume all annuity payments are end-of-period, ordinary annuity payments, and use a 7% interest rate, compounded annually, in your calculations).

You are faced with a choice of mortgage terms to purchase a new home costing $300,000. You are able to put a $40,000 down payment on the home. The bank offers you a fixed-rate of 4.5% for a 30-year loan, and one at 4% for a 15-year loan. You have determined that you can afford up to, but not more than, a $1750 monthly mortgage payment. How do the payment amounts on the 2 loans compare? Can you afford the 15-year loan?