1 MATH 131 TEST 3 NAME: ______________ SHOW SET-UP!! DATE: _______________ American General offers a 17-year annuity with a guaranteed rate of 7.30% compounded semi-annually. How much should you pay...

The assignments that say "Preview, you dont have to show the work
there are some with answers at the bottom but they still need work shown,
For problem #1, do one Compounded Annually, one Semi-Annually, one Quarterly. For part j, choose 3 to do for Compounded Continuously,







1 MATH 131 TEST 3 NAME: ______________ SHOW SET-UP!! DATE: _______________ American General offers a 17-year annuity with a guaranteed rate of 7.30% compounded semi-annually. How much should you pay for one of these annuities if you want to receive payments of $800 semi-annually over the 17 year period? PV = _____________________ E-Loan, an online lending service, recently offered 48-month auto loans at 3.6% compounded monthly to applicants with good credit ratings. If you have a good credit rating and can afford monthly payments of $289, how much can you borrow from E-Loan? PV = ______________________ What is the total interest you will pay for this loan? ______________ 2 Your credit card company agrees to lower the annual interest rate to 1.8% for you. If a payment of $200.00 is made each month, how many months will it take to pay off an unpaid balance of $10,590.67? (Round up to the next month.) No new purchases can be made with the credit card. (Assume the interest rate is compounded monthly.) The number of months (nt) is _______ You want to purchase an automobile for $35,400. The dealer offers you 0% financing for 72 months or a $3000 rebate. You can obtain financing for 72 months at 4.2% cm from Port Charles Federal Bank. Which option should you choose? Monthly payment from Dealer = ________ Monthly payment from Bank = _________ Which do you choose? ______ How much would you save each month? _______ 3 Ridge Forrester has a $433,500, 30-year mortgage at 5.4% compounded monthly. Find the monthly payment. Also find the unpaid balance after 10 years. Monthly payment = ____________ Unpaid balance after 10 years = ____________ |----------|----------|----------| After 10 years Ridge Forrester decides to refinance at 1.5% compounded monthly using the same monthly payment. How many years will it take him to pay off the mortgage. Use the PMT from the above problem. It will take ________years (round to 1 decimal place) Extra Credit: How much interest did he save by refinancing? _____________ 4 A sailboat costs $54,000. You pay 10% down and amortize the rest with equal monthly payments over a 15-year period. If you must pay 4.5% compounded monthly, what is your monthly payment? How much interest will you pay? Monthly payments: ______________ Total Interest paid: _____________ Amortization Table: PMT = $700 per month, r = 2.7% cm, AF = $63,000 Principal Payment Interest Reduce Principal New Principal 1 $63,000 $700 2 $700 3 $700 I1 = ____________ I2 = ____________ I3 = ____________ 5 Beth has just received an inheritance of $500,000 and would like to be able to make quarterly withdrawals over the next 20 years. She decides on an annuity that pays 6.4%, compounded quarterly. How much will her quarterly payments be to draw the account down to zero at the end of 20 years? Quarterly Payments = ____________ You want to set up an education account for your child and would like to have $175,000 after 18 years. You find an account that pays 5.4% interest, compounded semiannually, and you would like to deposit money in the account every six months. How large must each deposit be to reach your goal? Semi-annual Payments = _____________ How much interest did you earn? ______________ Your child (in the above problem) is now 18 years old and is planning to go away to college. How much can she withdraw each month for 5 years for her college expenses, if the College Bank pays 5.7% cm? Monthly Payments = _____________ 6 To accumulate enough money for a down payment on a home, a couple deposits $400 per month into an account paying 6.3% compounded monthly. How much money will be in the account in 5 years? How much interest will they earn on their savings? Amount in account after 5 years is ______________ Interest earned is _________________ A person wishes to have $300,000 in an account for retirement 25 years from now. How much money should be deposited quarterly in an account paying 8% compounded quarterly? Note: Sometimes this is called a “sinking fund”. Quarterly Payments are ________________ How much interest did they earn? ______________________ 7 You plan to retire in 30 years, and you want to save up to buy a condo in a Senior Retirement Village in Florida. You can afford to deposit $250 each month at Pine Valley National Bank at 7.2% compounded monthly. How much will you have in 30 years and how much interest did you earn? Amount in 30 years = _____________ Interest earned = ______________ You want to have $350,000 when you retire. The interest rate is 5.7% compounded monthly. If you can afford $400 per month, how many months will it take you and how many years is that? How many monthly payments? __________ (round up to next month) How many years is that? _____________ (round to 1 decimal) 8 You have $700,000 in your 401K and plan to withdraw $5000 each month. How many years will the money last, if the interest rate is 5.4%? It will last _______ years (round to 1 decimal place) In the above problem, if you can afford to live on $3000 each month instead, how many years will the money last? It will last _______years (round to 1 decimal place) Extra Credit: You are 30 years old and plan to retire in 35 year and want to have $700,000 in your retirement fund. Your bank offers 6% cm. What are your monthly deposits? PMT = _________ You are now 65 years old and ready to retire with $700,000 and want to withdraw $4000 per month. The bank still offers you 6% cm. How long will your retirement fund last? Number of months (nt) = __________ (round up to next month) Number of years (t) = ____________ (round to tenths)
Aug 10, 2021
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