I now have $12,000 in the bank earning interest of 0.50% per month. I need $22,000...

Transcribed Image Text:

I now have $12,000 in the bank earning interest of 0.50% per month. I need $22,000 to make a down payment on a house. I can save an additional $100 per month. How long will it take me to accumulate the $22,000? Question 2 A couple will retire in 50 years; they plan to spend about $32,000 a year in retirement, which should last about 25 years. They believe that they can earn 9% interest on retirement savings. a) If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b) How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $62,000 on their child's college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.) I now have $12,000 in the bank earning interest of 0.50% per month. I need $22,000 to make a down payment on a house. I can save an additional $100 per month. How long will it take me to accumulate the $22,000? Question 2 A couple will retire in 50 years; they plan to spend about $32,000 a year in retirement, which should last about 25 years. They believe that they can earn 9% interest on retirement savings. a) If they make annual payments into a savings plan, how much will they need to save each year? Assume the first payment comes in 1 year. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b) How would the answer to part (a) change if the couple also realize that in 20 years they will need to spend $62,000 on their child's college education? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Answer rating: 100% (QA)

SOLUTION Question 1 We can use the formula for future value of an annuity to calculate how long it will take to accumulate the 22000 FV PMT x 1 rn 1 r ... View the full answer