14. Today is Derek\'s 25 birthday and he needs to have $5,000,000 in his retirem
ID: 2816788 • Letter: 1
Question
14. Today is Derek's 25 birthday and he needs to have $5,000,000 in his retirement account on his 6sn birthday. In order to achieve this, he will make annual deposits into the account starting on his 26th birthday and ending on his 65th birthday. How much must the annual deposits be? Assumehisretirement account will pay 10% interest. A. 11,297.07 B. 12,454.92 C. 10,249.01 D. 125,000.00 15. A bank offers 12% APR on saving accounts, what is the effective annual rate (EAR) if the interest is compounded monthly? EAR = (1 + )m-1 A. 12.00% B. 1.13% C. 12.68% D. 2.14% TL 6.00% 16. Derck borrows $300,000 to buy a house. He has a 30-year mortgage with a rate of APR. The monthly mortgage payment is S 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. She will 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% pa. She will owe -_ on the car immediately following the 16h payment. A. 17397.75 B. 18,858.19 C. 19,508.99 D. 20,757.33 E. 21,348.72Explanation / Answer
14. Option A is the correct answer.
Calculate the Present value of $5,000,000 to the beginning of the 26th birthday,i.e. 5,000,000/(1+10%)^40=110,475
Present value of annuity= (C/r)*(1-(1/(1+r)^T))
In this case Present value is $110,475, r=10% and T=40. Using this C=11,297
15. Using the formula stated in the question, the value of EAR=12.68%
16. Using the loan amortization schedule, many excel examples are available on the internet the monthly payment comes to $1,799
17.Using the loan amortization schedule, many excel examples are available on the internet the value of the mortgage principal comes to $261,374
18.Using the loan amortization schedule, many excel examples are available on the internet the value of the mortgage principal comes to $19,508.99
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.