Part II: PROBLEMS

Round all dollar answers to 2 decimal places, round time (years or months) answers to one (1) decimal place and record interest rates as percent values rounded to one (1) decimal place. However, be sure to NOT input a dollar sign, commas, or percent sign on D2L. For example, record $3,284.33965 as 3284.34, record 37.285432 years as 37.3 and record .064358 = 6.4358% as 6.4.

1. Darian has $15,000 that he will use as a down payment on a new car. Assuming that Darian can afford a payment of $875 per month, how much can Darian spend on a car (that is, what is the total cost of the car that Darian can purchase) if the interest rate is 5.5% and if he will finance his purchase with a 6-year, monthly payment loan?

2. Suppose Link deposits $135,000 into an account earning 7.285 percent interest, compounded monthly. How many years (rounded to one decimal place for example, 32.1843 year = 32.2) will it take for Link s account to be worth $50,000

3. If Willow wants to fund a scholarship that would pay $15,500 per year forever at KSU, how much would Willow have to deposit today if she wanted the scholarship to start paying six (6) years from today? Assume the endowment could earn 4.25% p.a. interest forever.