The following five situations require the use of future and present values. Calc

Question

The following five situations require the use of future and present values. Calculate the amounts requested, rounding all answers to the nearest dollar. If you deposited $20,000 in a savings account at 5 percent interest, compounded quarterly, how much would be in the savings account at the end of 8 years? How much cash would you have to deposit today in a savings account to have $125,000 at the end of 10 years, assuming an annual interest rate of 12 percent, compounded monthly? If you deposited $800 per quarter, at the end of each quarter, in a retirement account earning 8 percent interest per year, how much would be in the savings account at the end of 20 years? How much cash would you have to deposit at the end of each year to have $250,000 at the end of 10 years assuming an interest rate of 9 percent per year? You have just purchased a new auto that cost $30.000. You paid $3,000 down and financed the balance over 72 months at 4% interest per year (beginning of the month payments of principal and interest). How much will your monthly payment be?

Explanation / Answer

1) formula = P ( 1 + i / 4) 4n

$20000 (1+ 0.08/4) 8*4 = $37690.81

2)

P (1 + 0.12/12)10*12 = 125000

P = $37874.35

3)

After 20 years amount would be = 800 {[1+ (0.08/4)]4*20 - 1} / 0.08/4

= $155,017.56

4)

P * (1 + 0.09)10 / 0.09 = 250000

=> P = 250000 * 0.09 / 2.367364 = $9504.24

5)

not clear about.

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