a years. Assume that a 4 percent interest rate is used to evaluate the annuity and that you recei payment at the beginni

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A Years Assume That A 4 Percent Interest Rate Is Used To Evaluate The Annuity And That You Recei Payment At The Beginni 1 (109.01 KiB) Viewed 16 times

a years. Assume that a 4 percent interest rate is used to evaluate the annuity and that you recei payment at the beginning of the year. What is the present value of the lottery? C*(1-(1+1-(1-1) C=50000 i=0.4 n=20 Present value =$706,697 b. How much interest is earned on the present value to make the $50,000-per-year payment Total Interest earned = (50000*20)- 706697=$293,303 2. Calculate the monthly mortgage payment made at the beginning of each month on a $100,000 mortgage. The mortgage is for 15 years and the interest rate is 5.5 percent. I Tom and Mary James just had a baby. They heard that the cost of providing a college education fo this baby will be $100,000 in 18 years. Tom normally receives a Christmas bonus of $4,000 every year in the paycheck prior to Christmas. He read that a good stock mutual fund should pay him an average of 10 percent per year. Tom and Mary want to make sure their son has $100,000 for college Consider each of the following questions. How much does Tom have to invest in this mutual fund at the end of each year to have $100,000 in 18 years? c. d If the bonus is not paid until the first of the year, how much does Tom have to invest at the beginning of each year to have $100,000 in 18 years? Tom's father said he would provide for his grandson's education. He will put $10,000 in a government bond that pays 7 percent interest. His dad said this should be enough. Do you agree? d If Mary has a savings account worth $50,000, how much will she have to withdraw from savings and set aside in this mutual fund to have the $100,000 for her son's education in 18 Years?