Tutorial : Time value of money

1) A 20-year-old student wants to save $3 a day for her retirement. Every day she places $3 in a drawer. At the end of each year, she invests the accumulated saving ($1,095) in a brokerage account with an expected annual return of 12 percent.

1. If she keeps saving in this manner, how much will she have accumulated at age 65?
2. If a 40-year-old investor began saving in this manner, how much would he have at age 65?
3. How much would the 40-year-old investor have to save each year to accumulate the same amount at 65 as the 20-year-old investor?

2) You have saved $4,000 for a down payment on a new car. The largest monthly payment you can afford is $350. The loan would have a 12 percent APR based on end-of-month payments. What is the most expensive car you could afford if you finance it for 48 months? For 60 months?

3) What is the future value of $100 after 3 years under 10 percent semiannual compounding? Quarterly compounding?

4)

1. Set up an amortization schedule for a $ 25,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 10 percent, compounded annually.
2. What percentage of the payment represents interest and what percentage represents principal for each of the 3 years? Why do these percentages change over time?