REACHING A FINANCIAL GOA Six years from today you need $10,000. You plan to depo

Question

REACHING A FINANCIAL GOA Six years from today you need $10,000. You plan to deposit $1,500 annually, with the first payment to be made a year from today, in an account that pays 9% effective annual rate. Your last deposit, which will occur at the end of Year 6, will be for less than $1,500 if less is needed to reach $10,000 How large will your last payment be? Round your answer to the nearest cent. EFFECTIVE INTEREST RATE You borrow $160,000; the annual loan payments are $11,623.83 for 30 years. What interest rate are you being charged? Round your answer to two decimal places.

Explanation / Answer

First we need to calculate the value at the end of year 5 is =

= $1,500 * [( 1 + .09 )5 - 1] / 0.09

= $1,500 * 5.9847

= $8,977.07

Then,

The value before last payment =

=$8,977.07 * 1.09

= $9,785.

Then,

Amount of last payment made at the end of year 6 =

= $10,000 - $9,785

= $215.

Thanks

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