1. Today is your 25th birthday. You will begin making equal deposits on each bir
ID: 2815231 • Letter: 1
Question
1. Today is your 25th birthday. You will begin making equal deposits on each birthday until your 65th birthday into an account that earns 6%. The first deposit will be made today. You want to withdraw $75,000 per year beginning on your 66th birthday and ending on your 85th birthday. The deposits must be $_________.
2.Derek borrows $300,000 to buy a house. He has a 30-year mortgage with a rate of 6.00% APR. The monthlymortgage payment is $_____________. Right after making the 50th payment, now Derek owes $____________ on the house.
Explanation / Answer
1. Today is your 25th birthday. You will begin making equal deposits on each birthday until your 65th birthday into an account that earns 6%. The first deposit will be made today. You want to withdraw $75,000 per year beginning on your 66th birthday and ending on your 85th birthday. The deposits must be $_________. Annual Withdrawal $75,000.00 Period 20 Rate 6.00% Type 1 FV 0 Present value = PV(6%,20,-75000,0,1) $911,858.74 Present Value $911,858.74 Period 40 Rate 6.00% Type 1 FV 0 Annual Deposit = PMT(6%,40,-860244.09) $57,173.14 Derek borrows $300,000 to buy a house. He has a 30-year mortgage with a rate of 6.00% APR. The monthlymortgage payment is $_____________. Right after making the 50th payment, now Derek owes $____________ on the house. Principal $300,000.00 Rate = 6%/12 0.50% Period = 30 x 12 360 Monthly payment PMT(0.50%,360,-300000) $1,798.65 Derek Owes = PV(0.50%,(360-50),-1798.65) $283,082.83 Year Monthly Payment Interest Principal Ending Bal. 0 $300,000.00 1 $1,798.65 $1,500.00 $298.65 $299,701.35 2 $1,798.65 $1,498.51 $300.14 $299,401.20 3 $1,798.65 $1,497.01 $301.65 $299,099.56 4 $1,798.65 $1,495.50 $303.15 $298,796.40 5 $1,798.65 $1,493.98 $304.67 $298,491.73 6 $1,798.65 $1,492.46 $306.19 $298,185.54 7 $1,798.65 $1,490.93 $307.72 $297,877.82 8 $1,798.65 $1,489.39 $309.26 $297,568.56 9 $1,798.65 $1,487.84 $310.81 $297,257.75 10 $1,798.65 $1,486.29 $312.36 $296,945.38 11 $1,798.65 $1,484.73 $313.92 $296,631.46 12 $1,798.65 $1,483.16 $315.49 $296,315.96 13 $1,798.65 $1,481.58 $317.07 $295,998.89 14 $1,798.65 $1,479.99 $318.66 $295,680.24 15 $1,798.65 $1,478.40 $320.25 $295,359.99 16 $1,798.65 $1,476.80 $321.85 $295,038.13 17 $1,798.65 $1,475.19 $323.46 $294,714.67 18 $1,798.65 $1,473.57 $325.08 $294,389.59 19 $1,798.65 $1,471.95 $326.70 $294,062.89 20 $1,798.65 $1,470.31 $328.34 $293,734.55 21 $1,798.65 $1,468.67 $329.98 $293,404.58 22 $1,798.65 $1,467.02 $331.63 $293,072.95 23 $1,798.65 $1,465.36 $333.29 $292,739.66 24 $1,798.65 $1,463.70 $334.95 $292,404.71 25 $1,798.65 $1,462.02 $336.63 $292,068.08 26 $1,798.65 $1,460.34 $338.31 $291,729.77 27 $1,798.65 $1,458.65 $340.00 $291,389.76 28 $1,798.65 $1,456.95 $341.70 $291,048.06 29 $1,798.65 $1,455.24 $343.41 $290,704.65 30 $1,798.65 $1,453.52 $345.13 $290,359.52 31 $1,798.65 $1,451.80 $346.85 $290,012.67 32 $1,798.65 $1,450.06 $348.59 $289,664.08 33 $1,798.65 $1,448.32 $350.33 $289,313.75 34 $1,798.65 $1,446.57 $352.08 $288,961.67 35 $1,798.65 $1,444.81 $353.84 $288,607.82 36 $1,798.65 $1,443.04 $355.61 $288,252.21 37 $1,798.65 $1,441.26 $357.39 $287,894.82 38 $1,798.65 $1,439.47 $359.18 $287,535.64 39 $1,798.65 $1,437.68 $360.97 $287,174.67 40 $1,798.65 $1,435.87 $362.78 $286,811.89 41 $1,798.65 $1,434.06 $364.59 $286,447.30 42 $1,798.65 $1,432.24 $366.42 $286,080.88 43 $1,798.65 $1,430.40 $368.25 $285,712.64 44 $1,798.65 $1,428.56 $370.09 $285,342.55 45 $1,798.65 $1,426.71 $371.94 $284,970.61 46 $1,798.65 $1,424.85 $373.80 $284,596.81 47 $1,798.65 $1,422.98 $375.67 $284,221.14 48 $1,798.65 $1,421.11 $377.55 $283,843.60 49 $1,798.65 $1,419.22 $379.43 $283,464.16 50 $1,798.65 $1,417.32 $381.33 $283,082.83
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