Mortgage payments

Now are buying your first house for 220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining 190,000 30 year mortgage with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make?

Loan Amortization: Principal repayment

Suppose you borrowed $25,000 at a rate of 80% and must repay it in A equal installments at the end of

each of the next 4 years. By how much would you reduce the amount you owe in the first year?

Loan Amortization: Ending balance

Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of

cach of the next 4 years. How much would you still owe at the end of the first year, after you have

made the first payment?

Retirement planning

Your sister turned 30 today, and she is planning to save $3,000 per year for retirement, with the first

deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide

a return of 10% per year. She plans to retire 35 years from today, when she turns 65, and she expects

to live for 30 years after retirement, to age 95. nder these assumptions, how much can she spend in

each year after she retires? Her first withdrawal will be made at the end of her first retirement year.

Non-Annual compounding

You just deposited $5,000 in a bank account that pays a 12% nominal interest rate, compounded

monthly. If you also add another $10,000 to the account one year (12 months) from now and another

$15,000 to the account two years from now, how much will be in the account three years (36 months)

from now?

Saving to start a business

After graduation, you plan to work for Mega Corporation for 10 years and then start your own business.

You expect to save $5,000 a year for the first 5 years and $10,000 annually for the following 5 years,

with the first deposit being made a year from today. In addition, your grandfather just gave you a

$20,000 graduation gift which you will deposit immediately. If the account earns 8% compounded

annually, what how much will you have when you start your business 10 years from now?

Mortgage payments You are buying your first house for $220,000, and are paying $30,000 as a down payment. You have arranged to finance the remaining $190,000 and arear mortgage with a 7% nominal interest rate and monthly payments. What are the equal monthly payments you must make? Loan Amortization: Principal repayment Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of each of the next 4 years. By how much would you reduce the amount you owe in the first year? Loan Amortization: Ending balance Suppose you borrowed $25,000 at a rate of 8% and must repay it in 4 equal installments at the end of each of the next 4 years. How much would you still owe at the end of the first year, after you have made the first payment? Retirement planning Your sister turned 30 today, and she is planning to save $3,000 per year for retirement, with the first deposit to be made one year from today. She will invest in a mutual fund, which she expects to provide a return of 10% per year. She plans to retire 35 years from today, when she turns 65 , and she expects to live for 30 years after retirement, to age 95 . Under these assumptions, how much can she spend in each year after she retires? Her first withdrawal will be made at the end of her first retirement year. Non-Annual compounding You just deposited $5,000 in a bank account that pays a 12% nominal interest rate, compounded monthly. If you also add another $10,000 to the account one year ( 12 months) from now and another $15,000 to the account two years from now, how much will be in the account three years (36 months) from now? Saving to start a business After graduation, you plan to work for Mega Corporation for 10 years and then start your own business. You expect to save $5,000 a year for the first 5 years and $10,000 annually for the following 5 years with the first deposit being made a year from today. In addition, your grandfather just gave you $20,000 graduation gift which you will deposit immediately. If the account earns 8% compounde annually, what how much will you have when you start your business 10 years from now