a) Compute the present value of this annuities (2.5 points)

Monthly payment:

$ 1,300

Number of years for payments:

30

Interest rate:

5.5%

Present value =

b) Compute the future value of the annuities in part a) (2.5 points)

Future value =

c) Suppose you are buying a car and finance it with a car loan like below (2.5 points)

Car price		45,000
Down payment		7,000
Number of years		5
APR		7.50%
What is your monthly payment?
	PMT =

d) Suppose you are saving for your retirement. You are 25 years old now and you want to retire when you are 65 years old (2.5 points)

Retirement goal:		1,200,000
APR		5.0%
How much will you need to save each month in order to meet your retirement goal?
	Monthly savings =

e) If your retirement goal is 1,500,000 instead and you still save the same amount each month found in part d), what is the APR you need to earn in order to meet the retirement goal of $1,500,000? (2.5 points)

Rate=

APR =

f) If your retirement goal is 1,500,000 and you are able to save $1,200 each month, how many years do you need to have $1,500,000 in your retirement account, assuming APR of 8%? (2.5 points)

Number of periods =		months
Number of years =		years

Answer rating: 100% (QA)

a To compute the present value of the annuity we can use the formula for the present value of an ordinary annuity Present Value Payment 1 1 rn r Where Payment 1300 monthly payment r Monthly interest r... View the full answer