Question

Calculate the money needed to achieve the financial goals of these people A. The parents of a baby wish to establish a college fund for their child. They deposit $100 every month into an account for 18 years. The money earns 6 3/8% interest compounded monthly. Find the future value of this account. B. How much money can the student withdraw from the account in "Part A" every month (including summer school) for 4 years of the money is now in an account that pays 6.1% compounded monthly? A newly married couple wants $25,000 twenty five years from now to take an anniversary trip to Hawaii. How much money must be deposited every month into an account earning 6.2% interest in order to meet this goal? A person receives $18,000 inheritance and decides to deposit it into an account earning 3.25% interest compounded quarterly. What will be the value of the money after 20 years? You want $5000 4 years from now for a down payment on a car. How much money must be deposited monthly into an account earning 4.2% compounded monthly to achieve this goal?

Answer 1

Calculate the money needed to achieve the financial goals of these people
A. The parents of a baby wish to establish a college fund for their child. They depos $100 every month into an account for 18 years. The money earns 6 3/8% interest compounded monthly. Find the future value of this account. B. How much money can the student withdraw from the account in "Part A" every month (including summer school) for 4 years if the money is now in an account that pays 6.1% compounded monthly?
A)
PMT	$100
Rate = 6 3/8% /12	0.53%
Period = 18 x 12 months	216
Future value = FV(.53%,216,-100)	$40,296.53
B)
Future Value = Present Value	$40,296.53
Rate = 6.1% /12	0.51%
Period = 4 x 12 months	48
PMT for 4 years= PMT(.51%,48,-40296.53)	$948.21
2)  A newly married couple wants $25,000 twenty five years from now to take an anniversary trip to Hawaii. How much money must be deposited every month into an account earning 6.2% interest in order to meet this goal?
Present Value	$ 25,000.00
Period = 25 x 12	300.00
Rate = 6.2%/12	0.52%
Monthly Deposit	$164.15
3)  A person receives $18,000 inheritance and decides to deposit it into an account earning 3.25% interest compounded quarterly. What will be the value of the money after 20 years?
Present Value	$ 18,000.00
Period = 20x 4	80.00
Rate = 3.25%/4	0.81%
Future vlaue	$34,389.30
4)
Present Value	$   5,000.00
Period = 4 x 12	48.00
Rate = 4.2%/12	0.35%
Monthly Deposit	$113.34
1 Calculate the money needed to achieve the financial goals of these people 3 A. The parents of a baby wish to establish a college fund for their child. They depos $100 4 A) 5 PMT 6 Rate = 6 3/8% /12 7 Period = 18 x 12 months 8 Future value = FV0.53%,216,-100) 100 =(51/8)%/12 = 18 12 =FV(B6,B7,-85,0) 10 B) 11 Future Value = Present Value 12 Rate = 6.1% /12 13 Period = 4 x 12 months 14 PMT for 4 years= PMT(.51%,48,-40296.53) =B8 =6.1%/12 -4.12 =PMT(B12,B13,-B11) 16 2) A newly married couple wants $25,000 twenty five years from now to take an annivers 17 Present Value 25000 18 Period = 25 x 12 =25.12 19 Rate = 6.2%/12 =6.2%/12 20 Monthly Deposit =PMT(B19,818,-B17) 3) A person receives $18,000 inheritance and decides to deposit it into an account earning 3.25% interest compounded quarterly. What will be the value of the money after 22 20 years? 23 Present Value 18000 24 Period = 20x 4 =20*4 25 Rate = 3.25%/4 =3.25%/4 26 Future vlaue =FV(B25,B24,0,-823) 27 28 4) 29 Present Value 30 Period = 4 x 12 31 Rate = 4.2%/12 32 Monthly Deposit 5000 =4*12 =4.2%/12 =PMT(B31,830,-B29)