QUESTION 7

Suppose you have accumulated $22,000 in credit card debt. If the interest rate on the credit card is 24.5% APR compounded monthly, how many years will it take you to pay off this debt if you pay $500 per month? (Answer to the nearest tenth of a year)

QUESTION 8

IF an interest rate is quoted as 15.6% APR compounded monthly, what would be the annual percentage yield (APY)? (Answer to the nearest tenth of a percent)

QUESTION 9

Suppose you plan to retire at age 70, and you want to be able to withdraw an amount of $75,000 per year on each birthday from age 70 to age 100 (a total of 31 withdrawals). If the account which contains your savings earns 5.3% per year simple interest, how much money needs to be in the account by the time you reach your 70th birthday? (Answer to the nearest dollar.) Hint: This can be solved as a 30-year ordinary annuity plus one withdrawal at age 70, or as a 31-year annuity due.

QUESTION 10

Today is your 25th birthday, and you have calculated that you need to accumulate $1.8 Million by your 70th birthday in order to retire in a manner in which you are accustomed to living. If your retirement account earns 7.3% per year simple interest, how much must you deposit on each of your birthdays (from 26 to 70) in order to reach your target retirement savings on your 70th birthday? (Answer to the nearest dollar.)