1.Jim deposits $2000 in an account with an APR of 1.77% interest compounded daily and wants to know what the balance will be in 10 years. Use Excel to determine how much will Jim have in the account in 10 years? (Use 365 days in 1 year.)
2. a. Andrea wants to know how much money she will have in 8 years if she deposits her $800 tax refund now and then deposits an additional $50 per month in her account that pays an APR of 1.5% compounded monthly. Use Excel to determine how much money will Andrea have in the account in 8 years?
b. If Andrea changes her mind and decides that instead of setting aside $50 per month she wants to know how much she will have to deposit each month to save up a total of $4000, we can use goal seek to find the value for PMT which yields $4000 at the end of 8 years. How much money will Andrea need to deposit per month?
3. Mario has a money market savings account with an APR of 3.25% compounded monthly
a. If Mario deposits $1700 now and doesn’t touch the account, how much money will he have in 3 years?
b. If Mario deposits $1700 now and doesn’t touch the account, how many years must he leave the money in the account to reach a future value of $5000?
c. If Mario makes the initial deposit of $1700 and then starts making regular deposits of $175 per month, how much will he have in 7 years?
d. If Mario starts with the $1700 deposit and continues making deposits of $175 per month, how long will it take him to accumulate $9500 for his dream vacation?
e. If Mario opens his account with a $1700 initial deposit and he wants to take his $9500 dream vacation in 3 years, how much will he need to deposit every month until then?
4. Suppose Rachel and Nadia buy a house and have to take out a loan for $194500. If they qualify for an APR of 4% and choose a 30 year mortgage, we can find their monthly payment by using the PMT formula. If Rachel and Nadia decide to pay $1500 per month, we can use goal seek to see how many years it will take to pay off the loan.
Use the PMT function and goal seek (as needed) to answer the following questions about Rachel and Nadia’s mortgage.
a. What is their monthly payment on the 30 year loan?
b. If they qualify for the same APR on a 15 year loan, what will the new monthly payment be?
c. If Rachel and Nadia have monthly payments of $1500 each month, how long will it take for them to pay off their loan?
d. If they want to have monthly payments of $800 and still pay the loan off in 30 years, what interest rate would they have to qualify for?
5. Once you submit the assignment it will look like it didn’t go through because it just exits out, but it will go through. Also, you will receive a 0 for it until I manually grade them.
6. You deposit $300 in an account earning 8% interest compounded annually. How much will you have in the account in 20 years?
7. You deposit $5000 in an account earning 2% interest compounded monthly. How much will you have in the account in 10 years?
8. How much would you need to deposit in an account now in order to have $4000 in the account in 5 years? Assume the account earns 4% interest compounded monthly.
9. You deposit $500 each month into an account earning 4% interest compounded monthly.
a) How much will you have in the account in 25 years?
b) How much total money will you put into the account?
c) How much total interest will you earn?
10. You deposit $3000 each year into an account earning 8% interest compounded annually. How much will you have in the account in 15 years?
11. Suppose you want to have $500,000 for retirement in 20 years. Your account earns 8% interest compounded monthly.
a) How much would you need to deposit in the account each month?
b) How much interest will you earn?
12. You have $400,000 saved for retirement. Your account earns 9% interest. How much will you be able to pull out each month, if you want to be able to take withdrawals for 20 years?
14. You want to be able to withdraw $30,000 each year for 30 years. Your account earns 5% interest.
a) How much do you need in your account at the beginning?
b) How much total money will you pull out of the account?
c) How much of that money is interest?
14. You can afford a $1250 per month mortgage payment. You’ve found a 30 year loan at 6% interest.
a) How big of a loan can you afford?
b) How much total money will you pay the loan company?
c) How much of that money is interest?
15. You want to buy a $30,000 car. The company is offering a 4% interest rate for 36 months (3 years). What will your monthly payments be?
16. You want to buy a $212,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan for the rest.
a) How much is the loan amount going to be?
b) What will your monthly payments be if the interest rate is 6%?
c) What will your monthly payments be if the interest rate is 7%?
