16. Derek borrows $300,000 to buy a house. He has a 30-year mortgage with a rate
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Question
16. Derek borrows $300,000 to buy a house. He has a 30-year mortgage with a rate of 6.00% APR. The monthly mortgage payment is $_____________.
A. 18000.00
B. 1798.65
C. 298.65 D. 10793.68
17. Derek borrows $300,000 to buy a house. He has a 30-year mortgage with a rate of 6.00% APR. Right after making 100 payments, what is the current mortgage balance?
A. 261,374
B. 141,271
C. 232,626 D. 120,135
18. Kerri James is considering the purchase of a car, which will cost her $24,600.
borrow the entire purchase price and make monthly payments over the next six years. The first payment is due next month and the interest rate is 3.00% p.a. She will owe $____ on the car immediately following the 16th payment.
17,397.75
18,858.19
19,508.99
20,757.33
21,348.72
19. Jensen will retire on his 65th birthday. He wants to withdraw $150,000 from his retirement account on each birthday from his 66th to his 85th to cover his living expense. How much will he need in his retirement account on his 65th birthday? Assume interest rate is 10%.
A. 1,297,304
B. 1,254,738 C. 8,291,250 D. 1,277,034
20. You want to have $1,000,000 in your bank account by your 65th birthday. You made up a monthly saving plan today based on a 5% annual interest rate. How will a sudden decrease in interest rate in the future affect your monthly savings? Do you need to save more or less each month?
A. More
B. Less
C. Same
D. You cannot tell with the above information
She will
For Problems 21 and 22, use the following information:
A couple saves $650.00 per month (at the end of each month) for 40 years. They can earn 7.30% annual interest with monthly compounding on this account. The couple wants their retirement account to last for 25 years. Once they begin retirement, they will move their money into a more conservative money market account that pays 3.00% per year.
21. How much money will they have in their account at the end of the 40 years?
22. The couple wants their retirement account to last for 25 years. How much can they withdraw each month after they retire if they want the money to last for 25 years? The first withdrawal will occur one month after the couple retires. Remember, the couple puts their money into an account paying 3.00% per year after they retire.
23. (Bonus Question). 12 years ago, Leon borrowed $1,500,000 to purchase a new home. The loan had an interest rate of 6.25% annually and a term of 360 months (i.e. required 30 years of monthly payment with the first payment due one month after Leon took out the loan). Every month since taking out the loan, Leon paid $1,500 in addition to the required monthly payment. Given Leon’s payment, what is the current balance on the loan now (i.e. the balance after Leon made the 144 payment)?
Explanation / Answer
16)
Equal monthly payment [P×r×(1+r)^n]÷[(1+r)^n-1] Here, 1 Interest rate per annum 6.00% 2 Number of years 30 3 Number of compoundings per per annum 12 4 = 1÷3 Interest rate per period ( r) 0.50% 5 = 2×3 Number of periods (n) 360 Loan amount (P) $ 300,000.00 Equal monthly payment $ 1,798.65 (300000*0.50%*(1+0.50%)^360)/((1+0.50%)^360-1)Related Questions
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