Your friends were excited to hear you have chosen accounting for a career. They have several practical questions regarding money and interest (time value of money). Please assist your friends by answering their respective questions. For each question: A. Estimate without using a table, calculator, etc. B. Document the step-by-step detail showing them how you solved the question. NOTE: To solve use one of the following: EXCEL Business calculator Text tables (not recommended). Include all the detail steps for whichever tool you choose. For example, if using EXCEL show all formulas (copy so reader could duplicate your work). If using a business calculator, in detail in proper order show numbers and buttons you input to obtain your answer. C. Provide a one to three sentence written explanation to your friend explaining the basic time value of money concept(s) impacting the solution. Problems start with "Friend #1 at the top of page 2. Friend #1 - Car Loan - What will by my monthly payment if I purchase a used car for $8,500? The dealer has offered to finance the purchase (car loan) over four years at 5%. No down payment is required. A. B. C. Friend #2 - Credit Card Debt - How long will it take me to pay off my credit card balance of $3,750? The credit card company is charging 10% interest. I can afford to pay $150/month, but would prefer to pay $100/month because I want to continue my cable service. Please show me the answer to both scenarios. A. B. C. Friend #3 Home Mortgage Payment - I found my dream house in St. Paul but I am not sure I can afford it? I have the $15,000 for the down payment but it is the monthly payments that I am not sure about? What will my monthly payments be? Selling price: $215,000 Down payment: $15,000 Loan: 30-year $200,000 loan at 6% A. B. C. Friend #4 - Saving for my kids college - I want to help my three kids pay for college. My partner and I have agreed to provide $100,000 to each of our kids. We haven't started saving yet but my kids will be attending college as follows: Kid #1 Is six years old...assume we have 12 years to accumulate $100,000. How much will I need to put in each month if I earn 6% interest? A. B. C. Your friends were excited to hear you have chosen accounting for a career. They have several practical questions regarding money and interest (time value of money). Please assist your friends by answering their respective questions. For each question: A. Estimate without using a table, calculator, etc. B. Document the step-by-step detail showing them how you solved the question. NOTE: To solve use one of the following: EXCEL Business calculator Text tables (not recommended). Include all the detail steps for whichever tool you choose. For example, if using EXCEL show all formulas (copy so reader could duplicate your work). If using a business calculator, in detail in proper order show numbers and buttons you input to obtain your answer. C. Provide a one to three sentence written explanation to your friend explaining the basic time value of money concept(s) impacting the solution. Problems start with "Friend #1 at the top of page 2. Friend #1 - Car Loan - What will by my monthly payment if I purchase a used car for $8,500? The dealer has offered to finance the purchase (car loan) over four years at 5%. No down payment is required. A. B. C. Friend #2 - Credit Card Debt - How long will it take me to pay off my credit card balance of $3,750? The credit card company is charging 10% interest. I can afford to pay $150/month, but would prefer to pay $100/month because I want to continue my cable service. Please show me the answer to both scenarios. A. B. C. Friend #3 Home Mortgage Payment - I found my dream house in St. Paul but I am not sure I can afford it? I have the $15,000 for the down payment but it is the monthly payments that I am not sure about? What will my monthly payments be? Selling price: $215,000 Down payment: $15,000 Loan: 30-year $200,000 loan at 6% A. B. C. Friend #4 - Saving for my kids college - I want to help my three kids pay for college. My partner and I have agreed to provide $100,000 to each of our kids. We haven't started saving yet but my kids will be attending college as follows: Kid #1 Is six years old...assume we have 12 years to accumulate $100,000. How much will I need to put in each month if I earn 6% interest? A. B. C
