Question

1. What is the amount you would need to invest today or order to have $30,000 in 20 years and your investment has a 5% rate of return that is compounded annually? Round your answer to the nearest cent.

2. How much would you need to invest today in order to receive a monthly payment of $500 for 3 years. At the end of the three years there will be nothing left in the investment. This investment will yield 12%. Round your answers to the nearest cent.

3. How much would you need to invest today in order to receive a monthly payment of $500 for 3 years. At the end of the three years there will be $10,000 left in the investment. This investment will yield 12%. Round your answers to the nearest cent.

4. You have a loan that requires minimal monthly payments of $700 for 36 months with an interest rate of 12%. How much was the original amount of your loan? Round answers to nearest cent.

5. How much would the monthly payment be for a three year car loan of $15,000 that has a 12% interest rate?

6. You have a loan for $14,000 that has a minimum payment of $1,031 per year for 20 years. What is the interest rate on your loan? Round your answer to the nearest whole percent.

Answer 1

The amount to be invested today to have $30,000 in 20 Years at 5.00% interest rate

Here, we’ve Future Value = $30,000

Annual interest rate (r) = 5.00% per year

Number of years (r) = 20 Years

Therefore, the Present Value = Future Value / (1 + r)n

= $30,000 / (1 + 0.05)20

= $30,000 / (1.05)20

= $30,000 / 2.653297705

= $11,306.68