HW 2 Assignment(1) References Mailings Review View Normal No Spacing Heading 1 H

Question

HW 2 Assignment(1) References Mailings Review View Normal No Spacing Heading 1 Heading 2 1.) If you are a mortgage lender, what is the most you are willing to lend a borrower TODAY in the following situation? The borrower has promised to pay you $13,000 at the end of each year for 20 years, and you want to earn a 12% annual rate of return. PMT i- FV- PV of Ordinary Annuity 2.) How much will a $50 deposit made TODAY be worth in 20 years if interest is compounded annually at a rate of 10%? FV If your house is worth $350,000 TODAY and it appreciates 4% annually, how much is your house worth in 30 years? ia 3.) PMT-

Explanation / Answer

Answer 1.

Annual Payment = $13,000
Period = 20 years
Rate of Return = 12%

Using financial calculator:

N = 20
PMT = 13000
i = 12%
FV = 0

PV = -97103

PV of ordinary annuity = $97,103

So, maximum amount lent is $97,103

Answer 2.

Amount deposited = $50
Period = 20 years
Annual Interest Rate = 10%

PV = -50
N = 20
i = 10%
PMT = 0

FV = 336

So, future value of amount deposited is $336

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.