PART B: BORROWING MONEY Serena is going to college to study nursing. She estimates that she will need $35,000 to cover her three-year program. Her costs include living expenses, food, tuition, books and school supplies. She estimates that she will be able to save $12,500 from her summer job to help pay for college. She will borrow the remaining money for 5 years, compounded monthly at 3.8%. a) How much money will Serena be borrowing from the bank? (KN - 2) b) What will Serena's monthly payments be? (AP-3) PV PMT FV Rate Periods Compounding = = = 3.8016 Monthly c) How much interest does she pay on the loan? (AP-2) = Amount:
PART B: BORROWING MONEY Serena is going to college to study nursing. She estimates that she will need $35,000 to cover her three-year program. Her costs include living expenses, food, tuition, books and school supplies. She estimates that she will be able to save $12,500 from her summer job to help pay for college. She will borrow the remaining money for 5 years, compounded monthly at 3.8%. a) How much money will Serena be borrowing from the bank? (KN - 2) b) What will Serena's monthly payments be? (AP-3) PV PMT FV Rate Periods Compounding = = = 3.8016 Monthly c) How much interest does she pay on the loan? (AP-2) = Amount:
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter9: Current Liabilities, Contingencies, And The Time Value Of Money
Section: Chapter Questions
Problem 9.19E
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Transcribed Image Text:PART B: BORROWING MONEY
Serena is going to college to study nursing. She estimates that she will need $35,000 to cover her three-year
program. Her costs include living expenses, food, tuition, books and school supplies. She estimates that she
will be able to save $12,500 from her summer job to help pay for college. She will borrow the remaining
money for 5 years, compounded monthly at 3.8%.
a) How much money will Serena be borrowing from the bank? (KN-2)
b) What will Serena's monthly payments be? (AP-3)
PV
PMT
FV
Rate
3.8%
Periods
Compounding
Monthly
c) How much interest does she pay on the loan? (AP-2)
=
=
=
=
=
PART C: SAVING FOR THE FUTURE
You and your best friend have decided that you are going to go an African Safari once you have graduated
from college. You estimate that this trip of a lifetime will cost $12,000. You decide that you will start investing
for your trip now. You will be investing money for 4 years in account with an interest rate of 6.15%
compounded quarterly.
a) How much will your quarterly payments be? (AP-3)
PV
PMT
FV
Rate
Periods
Compounding
b) What will your total investment be after 4 years? (TH-3)
=
=
=
desold
=
=
6.15%
Amount:
Amount:
c) How much interest have they earned on their investment? (AP-2)
KN: 12
AP: /10
TH:
13
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