1. Suppose tomorrow is the first day of a month. Starting from tomorrow, you will make...

 

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1. Suppose tomorrow is the first day of a month. Starting from tomorrow, you will make deposits of $500 at the beginning of each month for 30 years in an investment account. After 35 years of investment, you will immediately withdraw all money from the account to buy a retirement annuity for 35 years with equal monthly payments (paid at month-end) from a life insurance company. If the annual rate of return for the deposit is 6% p.a. and that for the retirement annuity is 2.4% p.a., how much is the monthly payment from the insurance company? 2. Your 20-year mortgage loan amount is $400,000. And the APR is 6% p.a. How much is the total amount of interest that you need to pay for this loan? 1. Suppose tomorrow is the first day of a month. Starting from tomorrow, you will make deposits of $500 at the beginning of each month for 30 years in an investment account. After 35 years of investment, you will immediately withdraw all money from the account to buy a retirement annuity for 35 years with equal monthly payments (paid at month-end) from a life insurance company. If the annual rate of return for the deposit is 6% p.a. and that for the retirement annuity is 2.4% p.a., how much is the monthly payment from the insurance company? 2. Your 20-year mortgage loan amount is $400,000. And the APR is 6% p.a. How much is the total amount of interest that you need to pay for this loan?

Answer rating: 100% (QA)

To solve this problem we need to use the formula for the future value of an annuity and the formula ... View the full answer