MBA 5X02 Quantitative Methods Fall 2017 Final Exam Namense.ah Show all work, box
ID: 2799728 • Letter: M
Question
MBA 5X02 Quantitative Methods Fall 2017 Final Exam Namense.ah Show all work, box final answers! Form B Dr. Nayebpour 1 (8 pts ) You are planning to buy a house valued at $500,000 If you make 30% down payment and finance the remaining at rate of 4% compounded monthly for 30 years, find: a- monthly mortgage payment b- total amount of interest payed over 30 years. 2-(8 pts.) You plan to have $1,500,00 in IRA account in 30 years. How much must you contribute per year to achieve your goal if compounding a- rate is 7% per year compounded yearly. b- what monthly contributions needed to achieve this retirement goal if interest rate is 7% per year 3-(6 pts) Find the efective rate of interest for an account that pays 5% per year compounded: a- Semi-annually b- Monthly Daily Find the future amount of $25,000 invested at 4% compounded continuously.Explanation / Answer
As per rules I am providing answers to the first 4 sub-parts
Q1
a. Amount of loan = 500000*70% = 350000
Period = 30 years*12 = 360 months
Effective annual rate of interest = (1+0.04/12)^12 -1 = 4.074%
Rate = 4.074%/12 = 0.3395%
Monthly payment = PMT(3.33951%, 360, 350000) = $1685.95
b. Total payments = 1685.95*360 = 606,942.33
Total interest = 606,942.33- 350000 = $256,942.33
Q2: a. FV = 1500000
Period = 30 years
Rate = 7% annually componded
Annual contribution is found by using PMT function = PMT(7%,30,,1500000)
= $15,879.61
b.
FV=1500000
EAR for monthly compounding = (1+0.07/12)^12 -1
= 7.229%
Monthly rate = 0.6024%
Period = 30*12 = 360 months
Monthly contribution is found by using PMT function of excel as =PMT(0.60241%,360,,1500000)
1175.06
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