PART B.) An engineer who is saving for a new house plans on saving $100 per paycheck towards the down payment on the house. If she gets paid bi-weekly (twice per month), and she is depositing this money into a savings account that earns 5% annual interest, compounded monthly, how much money does she have saved up after 4 years? Assume that there is no inter-period interest.

PART B.) An engineer who is saving for a new house plans on saving $100 per paycheck towards the down payment on the house. If she gets paid bi-weekly (twice per month), and she is depositing this money into a savings account that earns 5% annual interest, compounded monthly, how much money does she have saved up after 4 years? Assume that there is no inter-period interest.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Part B) Suppose karen has $2000 each month that she can allocate between mortgage payments and retirement. That is, if she pays $1200 toward her mortgage, then she can put the remaining $800 into her retirement account each month. She plans to retire in 30 years. If she goes with the 15 year home loan, then the first 15 years she will have to split the $2000 between mortgage and retirement, but then the last 15 years she can put all $2000 into her retirement account. If she goes with the 20 year home loan, then the first 20 years she will have to split the $2000 between mortgage and retirement, but then the last 10 years she can put all $2000 into her retirement account. If she goes with the 30 year home loan, then she will split the $2000 between mortgage and retirement for all 30 years. Her best retirement option offers her a nominal rate of 5.5%, compounded monthly. Calculate the value of her retirement account in 30 years under each of the 3 plans. Which plan will give her the…
In order to accumulate enough money for a down payment on a house, a couple deposits $551 per month into an account paying 3% compounded monthly. If payments are made at the end of each period, how much money will be in the account in 5 years? What is the amount in the account after 5 years? $ (Round to the nearest cent as needed.)
Mary would like to save $10,000 at the end of 5 years for a future down payment on a car. a. How much should she deposit at the end of each month in a savings account that pays 1.2%/a, compounded monthly, to meet her goal? b. If you currently have a part-time job, consider your hourly wage. If you do not have a job, use the minimum hourly wage in your jurisdiction. How many hours each month would you have to work, just to make those payments? Write a brief reflection on the advantages and disadvantages to long-term saving for a purchase, compared to borrowing a large sum of money and paying it off over time. Note that interest rates for savings accounts are always lower than interest rates for borrowing.
Faye wants to save $90 000 in 3 years for a down payment on a house. She plans to make equal monthly payments of $2233.69 into an account earning 7.6% per year compounded monthly. How would Faye's monthly payments change if she saves for twice as long, 7 years? Her payments would be less than half O a) as much. O b) Her payments would increase. Her payments would be exactly half as c) much. d) Her payments would decrease but be more than half as much.
Todd is able to pay $360 a month for 6 years to finance a car purchase. a. If the interest rate is 6 percent compounded monthly, how much can Todd afford to borrow to buy a car? b. What is the effective annual rate of Todd's loan?
Armita is saving for the down payment on a house. She deposits $12,500.00 today, $8,250.00 in 4 months, and $6,900.00 in 3 years. The account earns interest at the rate i(1)= 8.788%. How much does she have in her account after 6 years?
A woman decides to purchase a $23000 car, and makes down payment of $3500. She arranges to borrow the remainder from a bank that will charge her 4.5% interest. She will make monthly payments for 4 years. a. Find her monthly payment amount b. determine the total amount she would pay for the car and the total amount of interest paid
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