statistics

MAT-144 Mission Project: Part B

Use the following resource to assist you in completing Part B of your Mission Trip assignment.

(1) The reasonable estimate for the expenses =$90,000, the question is how to raise the money.

Calculate several different ways to pay for your trip using the savings and loan information .

(A)

You already have 10% of the money needed for your trip, which begins in five years. You decide to invest that money at 4% APR compounded quarterly. Calculate out how much this will grow to by the start of your trip using the Compound Interest Formula.Here A(t) = value of the account after t years, the initial investment, APR (written as a decimal), number of times compounded per year, number of year

(B).

A philanthropic company, Missions-R-Us, has agreed to give you $100 each month from now until the trip starts. This money will be invested in an account that earns 6% APR compounded monthly. Figure out how much this will amount to by the start of your trip using the Savings Plan Formula on p. 228 of your textbook.

Here the monthly contributions, annual interest rate as a decimal, number of times compounded annually (12 once per month), time of the loan in years, value of account after t years.

(C)

The remaining balance must be taken out as a loan. If the above will pay for your entire trip, you must still investigate these loan scenarios. You can consider taking out a $10,000 emergency fund at these rates. There are two banks willing to offer you a loan. Bank A will lend you a 5-year loan at 9% APR compounded monthly with monthly payments. Bank B will lend you a 10-year loan at 12% APR compounded monthly with monthly payments. Calculate the payment for each of these loans using Loan Payment Formula on p. 249 of your textbook and discuss the reasons for choosing one or the other.

Here the initial loan amount, annual interest rate as a decimal, number of times compounded annually, time of the loan in years, your monthly payment

Include all calculations, including the formulas used, formatted with the Equation Editor in Microsoft Word. If you use a spreadsheet to check your calculations, include the spreadsheet as a separate attachment.

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