1) Sara Smith plans to have $50 withheld from her monthly paycheck and deposited
ID: 2374490 • Letter: 1
Question
1) Sara Smith plans to have $50 withheld from her monthly paycheck and deposited in a savings account that earns 12% annually, compounded monthly. If Malone continues with her plan for one and one-half years, how much will be accumulated in the account on the date of the last deposit? (Use Table B.4) (Round "FV factor" to 4 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
2) On January 1, 2011, a company agrees to pay $21,000 in five years. If the annual interest rate is 3%, determine how much cash the company can borrow with this agreement. (Use Table B.1) (Round "PV factor" to 4 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)
3) John Smith finances a new automobile by paying $5,800 cash and agreeing to make 20 monthly payments of $570 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (Use Table B.3) (Do not round intermediate calculations. Round "PV Factor" to 4 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
1) Sara Smith plans to have $50 withheld from her monthly paycheck and deposited in a savings account that earns 12% annually, compounded monthly. If Malone continues with her plan for one and one-half years, how much will be accumulated in the account on the date of the last deposit? (Use Table B.4) (Round "FV factor" to 4 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
Explanation / Answer
1) Sara Smith plans to have $50 withheld from her monthly paycheck and deposited in a savings account that earns 12% annually, compounded monthly. If Malone continues with her plan for one and one-half years, how much will be accumulated in the account on the date of the last deposit? (Use Table B.4) (Round "FV factor" to 4 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
Amount in the account = 50FVIFA(1%,18) = 50*19.6147 = $980.74
2) On January 1, 2011, a company agrees to pay $21,000 in five years. If the annual interest rate is 3%, determine how much cash the company can borrow with this agreement. (Use Table B.1) (Round "PV factor" to 4 decimal places and final answer to the nearest dollar amount. Omit the "$" sign in your response.)
Company Can borrow = 21000PVIFA(3%,5) =21000*4.5797 = $96173.70
3) John Smith finances a new automobile by paying $5,800 cash and agreeing to make 20 monthly payments of $570 each, the first payment to be made one month after the purchase. The loan bears interest at an annual rate of 12%. What is the cost of the automobile? (Use Table B.3) (Do not round intermediate calculations. Round "PV Factor" to 4 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
Loan amount = 570PVIFA(1%,20) = 570*18.0456 = $10285.99
Cost of the automobile = 10285.99+ 5800 = $16085.99
1) Sara Smith plans to have $50 withheld from her monthly paycheck and deposited in a savings account that earns 12% annually, compounded monthly. If Malone continues with her plan for one and one-half years, how much will be accumulated in the account on the date of the last deposit? (Use Table B.4) (Round "FV factor" to 4 decimal places and final answer to 2 decimal places. Omit the "$" sign in your response.)
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