Question

no 18, need proper working.

347 17) Your daughter is born today and you want her to be a millionaire by the time she is 35 years old. You open an investment account that promises to pay 12% per year. How much money must you deposit each year, starting on her Ist birthday and ending on her 35th birthday, so your daughter will have $1,000,000 by her 35th birthday? Ay$2,317 B) $3,455 C) $5,777 D) $9,450 MT 18) You borrow $25,000 to be repaid in 12 monthly installments of $2,292.00. The annual interest rate is closest to A) 1.5 percent. B) 12 percent. C) 18 percent. D) 24 percent. 19) Auto Loans R Them loans you $24,000 for four years to buy a car. The loan must be repaid in 48 equa monthly payments. The annual interest rate on the loan is 9 percent. What is the monthly payment? A) $500.92 B) $543.79 C) $563.82 D) $597.24

Answer 1

17) Annual Payment can be calculated using PMT function on a calculator

N = 35, PV = 0, I/Y = 12%, FV = 1,000,000 => Compute PMT = $2,317... A is correct.

18) Annual Interest rate can be calculated using I/Y function

N = 12, PMT = 2,292, PV = -25,000, FV = 0 => Compute I/Y = 1.50% (monthly rate)

Annual rate = 1.5 x 12 = 18%... C is correct.

19) Monthly payment can be calculated using PMT function

N = 48, I/Y = 9%/12, PV = 24,000, FV = 0

=> Compute PMT = $597.24... D is correct.