Lab #6 Retirement & Mortgages Global Distinction

MAT 143 Week 6 Lab: Managing Money – Retirement and Mortgages Unit: Managing Money Submitted by: Derrick Casinillo – Mathematics Faculty, Forsyth Technical Community College Assessment: Part Recommended Points I: Retirement Income 15 points II: Mortgage: How much you can afford 10 points III: Cultural Acclimation: Learning About Belize 15 points IV: Mortgage: Buying a house 60 points Total Score 100 points Resources: ∙ Crauder, B.,Evans, B., Johnson, J.,& Noell, A. (2015). Quantitative Literacy (2 nd Ed.) New York, NY. ∙ Gaze, E. (2014). Thinking Quantitatively: Communicating with Numbers (1 st Ed.) ∙ Rachowiecki, R., & Beech, C. (2004). Peru (5th ed.). Oakland, CA: Lonely Planet. ∙ https://www.globalpropertyguide.com/Caribbean/Belize ∙ https://www.belizepropertycenter.com ∙ https://www.belizepropertycenter.com/search3.php ∙ https://www.arebb.com/belize-real-estate INSTRUCTIONS: Answer each of the following questions on the Answer Sheet Word document. Correct responses must include units such as $ signs. Answer in complete sentences. All answers in Dollars and Cents Part I: Retirement Income – Perpetuity In this lab, you will set-up savings for your retirement plan (nest egg) after working. You will live on this money when you stop earning a paycheck. Retiring with enough money to live on comfortably is within all our reach. It’s very important to start saving for retirement from the day we begin to work. Just sit back and let the power of compounding take over. Perpetuity : If a retirement fund is set up as perpetuity, one withdraws each month only the interest accrued over that month; the principal remains the same. For example, suppose you have accumulated $500,000 in an account with a monthly interest rate of 0.5%. Each month, you can withdraw $500,000 X 0.005 = $2500 in interest, and the nest egg will always remain at $500,000. That is, the $500,000 perpetuity has a monthly yield of $2500. In general, the monthly yield for perpetuity is given by the formula: Monthly perpetuity yield = Nest egg × Monthly interest rate .