4. You know the payment amount for a loan and you want to know how much was borr

Question

4. You know the payment amount for a loan and you want to know how much was borrowed. a. Do you compute a present value or a future value?

5. You want to receive $5,000 per month in retirement. If you can earn .75% per month and you expect to need the income for 25 years, how much do you need to have in your account at retirement?

6. You want to receive $5,000 per month for 5 years. How much would you need to deposit today if you can earn .75% per month?

What monthly rate would you need to earn if you only have $200,000 to deposit?

7. Suppose you have $200,000 to deposit and can earn .75% per month. a. How much could you receive every month for 5 years?

8. Future Values for Annuities: Suppose you begin saving for your retirement by depositing $2,000 per year in an IRA. If the interest rate is 7.5%, how much will you have in 40 years?

Please show your work :)

Explanation / Answer

5)

PMT = 5000; N = 25*12 = 300; I/Y = .75; CPT PV = 595,808

6)

5(12) = 60 N; .75 I/Y; 5000 PMT; CPT PV = -240,867

7)

-200,000 PV; 60 N; .75 I/Y; CPT PMT = 4151.67

8)

Remember the sign convention!!!

=>40 N

=>7.5 I/Y

=>2,000 PMT

=>CPT FV = 454,513.04

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.