Question

TIME VALUE OF MONEY 32. Future Value of si John and Mary Rich invested $15,000 in a savings account paying 5.25% interest at the time their son, Mike, was born. The money is to be used by Mike for his college education. On his 18 birthday, Mike withdraws the money from his savings account. How much did Mike withdraw from his account? A. $42,755.32 B. $30,345.27 C. $35,233.89 D $37,678.11 33. Future Value of Annuity of Si John and Char Lewis' daughter, Debra, has just started high school. They decide to start a college fund for her and will invest $3,000 in a saving account at the end of each year she is in high school (4 payments total). The account will earn 6.5% interest compounded annually. How much will be in the college fund at the time Debra graduates from high school? A. $12,345.74 B. $13,221.52 C. $14,864.39 D. $15,211.28 34. Computing Car Payment Assume you are financing the purchase of a used car with a four-year loan. The loan has a 6% stated annual interest rate, compounded monthly. The price of the car is $8,000. What is the monthly car payment assuming that the payments start one month after the purchase? A $187.88 B. $195.49 C. S203.40 D. $209.57 35. Present Yales of Anasity of SI You are evaluating financing options for a loan on a house. You decide that the maximum mortgage payment you can afford is 5650 per month. The annual interest rate is 8.4%. If you get a mortgage that requires you to make monthly payments over a 30-year period, what is the maximum home loan you can afford? A. 580,455.37 B. $82,349.58 C 585,320.01 D. 590,346.55

Answer 1

В2 32 A В C D 1 invested value 2 32 15000 annual interest rate 5.25% 3 period of deposit (years) 18 $37,678.11 D. $37,678.11 withdrawl by Mike from his account hence, the correct answer is 6 7 annual investment 33 3000 annual interest rate 6.50% 9 period of deposit (years) 10 4 $13,221.52 amount in college fund at the time of graduation 11 B. $13,221.52 hence, the correct answer is 12 13 price of the car 14 34 8000 monthly interest rate total number of monthly payments monthly car payment 0.50% 15 16 48 $187.88 17 A. $187.88 hence, the correct answer is 18 19 maximum monthly installment 20 35 650 monthly interest rate 0.70% 21 total number of monthly payments 22 360 $85,320.01 maximum affordable loan amount 23 C. $85,320.01 hence, the correct answer is 24 25 Ln

for formulas and calculations, refer to the image below -

B2. 32 C D E 1 15000 32 2 invested value annual interest rate 0.0525 3 period of deposit (years) 18 4 = FV(D3,D4,0,-D2) D. $37,678.11 withdrawl by Mike from his account 5 hence, the correct answer is 6 7 annual investment 33 3000 8 annual interest rate 0.065 period of deposit (years) 4 10 amount in college fund at the time of graduation =FV(D9,D10,-D8) B. $13,221.52 11 hence, the correct answer is 12 13 price of the car monthly interest rate total number of monthly payments monthly car payment 34 8000 14 6%/12 15 4*12 16 =PMT(D15,D16,- D14) A. $187.88 17 hence, the correct answer is 18 19 35 maximum monthly installment 650 20 -8.4%/12 monthly interest rate 21 total number of monthly payments - 30*12 22 =PV(D21,D22,-D20) C. $85,320.01 maximum affordable loan amount 23 hence, the correct answer is 24 25 LON CO 9

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