You would like to save for a car. You would like to have $20,000 saved in 5 years. You decide to make payments at the end of each month into an account earning 6.7% interest per year, compounded monthly for the next 5 years in order to accumulate the desired amount.  a) What size payments should be made? Round to the Penny $  b) How much total interest did they earn on the investment over 5 years? Round to the penny $

Q: You want to be able to withdraw $4000 from an account at the end of each 6-month period (that is,…

A: Present Value can be calculated using PV function in excel   PV (rate, nper, pmt, [Fv], [type])…

Q: You need to have 59,173 dollars to buy a new car 5 years from now. How much do you need to save at…

A: An annuity is the sum total of all the periodic payments or investments made over the period of time…

Q: You have just deposited $5,000 into an account that promises to pay you an annual interest rate of…

A: Amount of deposit=$5000Interest rate=5.3%Number of years=10

Q: How much will you need to save per month to have $200,000 after 12 years, if your account earns 5%…

A: The formula used as follows: Future value of annuity=Payment×1+rn-1r

Q: You are saving for a Porsche Carrera Cabriolet, which currently sells for nearly half a million…

A: Time value of money :— It means that value of money in present days has more as compared from same…

Q: Suppose you wish to start up your coffee shop.  You need to borrow $50,000 today.  You intend to pay…

A: Using PMT function of the excel to calculate monthly withdrawals

Q: Suppose you would like to save enough money to pay cash for your next car. The goal to save an extra…

A: Computation of quarterly deposit:Hence, the quarterly deposit is $921.76.

Q: You want to buy a car, and a local bank will lend you $20,000. The loan would be fully amortized…

A: Given Information in the Question:- Loan Amount is $20,000 Loan Period is 5 Years or 60 months…

Q: You would like to save for a car. You would like to have $20,000 saved in 4 years. You decide to…

A: Future value required (FV) = $ 20,000 Annual interest rate = 6% Monthly interest rate (r) = 6%/12 =…

Q: you are saving money to buy a car. if you save $290 per month starting one month from now at an…

A: An Annuity is a continuous flow of systematic timely cash flows made or received for a stipulated…

Q: Daysha would like to save $460 at the end of every three months for the next 6 years in a savings…

A: As per the given information: Interest rate - 1.92% compounded annually Amount deposited at the end…

Q: You would like to have $600,000 when you retire in 40 years. How much should you invest each quarter…

A: Here, To Find: Part a). Amount of deposit each quarter =? Part b). Total money deposited into the…

Q: When you start your career, you decide to set aside $600 every month to deposit into an investment…

A: GIVEN, R=11% A=$600 N=25 M = 12 (MONTHLY COMPOUNDING)

Q: If Say you want to buy your dream car, costing $40k, in 5 years. You are saving up for that by…

A: Car Cost = Future Value Required = 40,000 N = 60 months Monthly Interest Rate = 0.25% Monthly…

Q: Find how much money needs to be deposited now into an account to obtain $40,000 in 5 years if the…

A: Future value (FV) = $40,000 Period (n) = 5 Years Interest rate (r) = 7%

Q: Say you want to invest a certain amount of your salary each year. This year you take $2,500 out of…

A: The value of current payment or upcoming flow of payments at any future date when flow of payment…

Q: Suppose you invest $140 a month for 3 years into an account earning 8% compounded monthly. After 3…

A: Future value of ordinary annuity(cash flow due at the end of year) can be calculated by using this…

Q: To save up for your dream business, you committed to deposit P2,000, starting today, every month in…

A: Present value (PV)= P2,000 Interest rate (r)= 6% Number of period (n)= 5 Future value (FV)

Q: Someone wants to save a sum of money. They are planning to save for a 5 year period with a deposit…

A: A theory that helps to compute the present or future value of the cash flows is term as the TVM…

Q: If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much…

A: PV=FV/(1+i)^n (PV= present value FV= Future value i= discount rate  n= Number of period ) FV=…

Q: You think you will be able to deposit $4,000 at the end of each of the next three years in a bank…

A: Annuity  An annuity is the series of payments which is received or paid for a certain period of…

Q: You want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over…

A: Loan is one of the alternative of financing. An individual or organization who is taking the loan…

Q: You make a one-time investment of $500 and leave it for 5 years, earning an annual interest rate of…

A: In this question we need to compute the amount of interest we have earned after 5 years and also…

Q: Suppose you want to buy a home after 3 years and you will need $15,000 for that. You open a savings…

A: As per the time value of money, a dollar is worth more today than the same dollar in the future.…

Q: You want to have $35,000 in cash to buy a car 3 years from today. You expect to earn 3.6 percent,…

A: In this we have to calculate present value of future value.

Q: You buy a $36,000 car. You put $1,000 down and finance the rest with a 3.6% interest loan with…

A: Amortized loan: It is a type of loan where the borrower would make an equal periodic payment towards…

Q: How much will you have to save each year (to the nearest dollar)?

A: Time value of money (TVM) means that the amount of money received in the present period will have…

Q: Say, you want to buy your dream car, costing $40k, in 5 years. You are saving up for that by making…

A: Car cost = Future Value Required = 40,000 Time Period = 60 months Monthly Deposit = ? First Month…

Q: Suppose you invest $120 a month for 5 years into an account earning 9% compounded monthly. After 5…

A: Computation:

Q: You think you will be able to deposit $4,000 at the end of each of the next three years in a bank…

A: The future value function or concept can be used to determine the future value of a present sum or…

Q: Suppose you invest $200 a month for 6 years into an account earning 9% compounded monthly. After 6…

A: Time Value of Money states that a dollar is worth more today than anytime in the future because they…

Q: You want to buy a new sports car 3 years from now and you want to save $4,200 per year, beginning…

A: Using excel FV function

Q: Suppose you have decided to put $500 at the beginning of every month in a savings account that…

A: Monthly deposit (m) = $500 Monthly interest rate (r) = 0.00416666666666667 (i.e. 0.05 / 12) Number…

Q: You have just deposited $12,000 into an account that promises to pay you an annual interest rate of…

A: Calculate the future value at the end of the year 8 as follows: Future value = Present…

Q: Suppose you invest $140 a month for 3 years into an account earning 8% compounded monthly. After 3…

A: The future value is the future worth of the amount that will be paid or received at future.

Q: Suppose you'd like to save enough money to pay cash for your next car. The goal is to save an extra…

A: The quarterly amount will be found using excel’s pmt function. It is the minimum amount that must be…

Q: You want to be able to withdraw $4500 from an account at the end of each 6-month period (that is,…

A: Using Excel PV function

Q: How much would be in your savings account in 12 years if you deposited $1,500 today? Assume the bank…

A: Given details are : Present value = $1500 Time period = 12 years Interest rate = 5% We need to…

Q: You want to save for a down payment on a new home in the future. You can invest $225 at the end of…

A: We need to use future value of annuity formula to calculate amount of saving at the end of 5 year…

Q: You would like to put some money into an account so that you will have $6000 in the account 13 years…

A: Present Value can be calculated using PV function in excel   PV (rate, nper, pmt, [Fv], [type])…

Q: You have decided to open a savings account and put $9000 in your local bank at an interest rate of…

A: Given: Present value = $9,000 Interest rate = 0.6% Years = 8

Q: You want to buy a car and therefore you borrowed $10,000 from a bank today for 6 years. The nominal…

A: It can be calculated using PMT function in excel. PMT(rate, nper, pv, [fv], [type]) Rate The…

Q: How much will you investment be worth in 5 years?

A:

Q: 1. Determine how much you will have saved after 9 years. 2. Determine the amount saved if you were…

A: Time value of money:   Time value of money is a vital concept to the investors, as it suggests them…

Q: You want to be able to withdraw $25,000 each year for 20 years. Your account earns 10% interest.…

A: Part A-C:Calculation of Amount in the Account, Total Money in the Account and Total Interest:A) The…

Q: You want to be able to withdraw $45,000 each year for 25 years. Your account earns 10% interest. a)…

A: Annual withdraw each year(P) = $45,000 Interest Rate(r) =10% Years(n) = 25

Q: Suppose you invest $120 a month for 5 years into an account earning 8% compounded monthly. After 5…

A: The future value is an estimation of value received in future on the basis of periodic cash deposits…

Q: Suppose you invest $140 a month for 6 years into an account earning 7% compounded monthly. After 6…

A: Compounding can able to increases earnings generated  from an asset by reinvesting it to achieve…

Q: You are interested in a car which costs $25,000. You have a $2000 down payment, and you have a found…

A: A loan is amortized by paying equal monthly installments comprising Principal and interest. Total…

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.