Question

You plan to invest your money either in a Bank CD paying 3% per year or a Mutual fund with an expected return of 6%. You have $300,000 to invest for 7 years. How much more money will you have at the end of 7 years if you invest in the Mutual fund?

$367,491

$227,682

$198,671

$128,540

$ 82,127

On August 1, you borrow $180,000 to buy a house. The mortgage rate is 7.0 percent. The loan is to be repaid in equal monthly payments over 15 years. The first payment is due on September 1. How much of the tenth payment applies to the principle balance? (Assume that each month is equal to 1/12 of a year.)

$543.22

$566.24

$589.28

$598.41

$615.32

You plan to deposit $1,000 every month into an IRA starting one month from today. If the annual interest rate is 9%, how much will you have after 40 years?

$337,882

$4,681,320

$4,932,407

$4,987,326

$5,103,212

Answer 1

Ans 1) Future value of money = present value of money * (1 + interest rate)^time period

Future value of money in CD = 300000 * (1.03)^7

= $368962.16

Future value of money in mutual funds = 300000 * (1.06)^7

= $451089.08

more money will you have at the end of 7 years if you invest in the Mutual fund = $451089.08 - $368962.16

= $82127