1. Future and Present Value
Calculate the effective rate for 2.6% interest compounded monthly. Round to the nearest hundredth of a percent.
r=.026, m=12
reff=2.63%
Calculate the future value of an increasing annuity of $125 per month for 2.5 years at 5.5% interest compounded monthly.
R=125, r=.055, m=12, F=?
F=$4,010.22
Calculate the present value of $15,000 payable in 6 years at 1.3% interest compounded semiannually.
P=?, F=15,000, r=.013, m=2
P=$13877.97
Jacob knows that he will need to buy a new boat in 5 years. The boat will cost $25,000 by then. How much should he invest now at 4% compounded quarterly, so that he will have enough to buy a new boat?
t=5, F=25,000, P=?, r=.04, m=4
P=$21317.16
On December 31, 2012, a house was purchased with the buyer taking out a 35-year $80,000 mortgage at 3.2% interest compounded monthly. The mortgage payments are made at the end of each month.
What will be the unpaid balance of 2032?
20 years difference, Therefore, 240 payments would be made with 180 payments left.
Unpaid Balance will be $45,252.79
Dr. Pods Nursery wants to build a $145,000 greenhouse in one and a half years. The company sets up a sinking fund with payments made quarterly. Find the payment into this fund if the money earns 5% compounded quarterly.
F=145,000, t=1.5, m=4, r=.05, R=?
R=$23,422.40
On December 31, 2012, a house was purchased with the buyer taking out a 35-year $80,000 mortgage at 3.2% interest compounded monthly. The mortgage payments are made at the end of each month.
How much of the principle will be paid off during the year 2032?
Principle paid off during the year 2032 is $2269.11