AD 632 ELAC Annual Interest Rate Worksheet

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Wnzrzrf233

Economics

AD 632

East Los Angeles College

AD

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AD 632 Financial Concepts Non-CONNECT Homework #2 Financial Calculator 1) Abby wants to purchase a new car that will cost $24,000. She will make a down payment of $2,500 and will borrow the rest. The annual interest rate on the loan is 4.65%. The monthly principle and interest payments will be $350.00. How many monthly payments will Abby have to make to pay off the car loan? Which model financial calculator are you using___________________________ N i PV PMT FV 2) Judy needs to purchase some new appliances for her new condo. The appliances will cost $1,640. The store is offering a special for the financing of the appliances. The terms are 24 months with a minimum monthly payment of $90. What annual interest rate is Judy being charged? N i PV PMT FV 3) Steven wants to save for a family vacation in 3 years. The cost of the vacation will be $16,500. He plans to invest in a mutual fund that will earn 7.2% annually. To reach his goal, how much does Steven need to invest today? N i PV PMT FV 4) Meredith wants to begin a retirement savings account. She plans on retiring in 42 years and wants to accumulate $2,200,000 by the time she retires. If she is just beginning her savings and can earn 9.2% on her investments, how much will she need to save each month? N i PV PMT FV 5) Wil just learned that 72 years ago his aunt left him $7,500 in an investment which paid 4.8% annual interest. What is the value of that investment today? N i PV PMT FV 6) Aubrey has an opportunity to invest $10,000 in a Certificate of Deposit (CD) that will pay her 2.78% annually. When the CD matures in 6 years, how much will Aubrey receive? Note: CD’s only pay interest at the end of the period. N i PV PMT FV 7) Assume the same facts as in 6) above, except the interest will be compounded semiannually. When the CD matures in 6 years, how much will Aubrey receive? N i PV PMT FV 8) Assume the same facts as in 6) above, except the interest will be compounded monthly. When the CD matures in 6 years, how much will Aubrey receive? N i PV PMT FV 9) Evan purchased a house and obtained a $380,000 fully amortized level payment 15-year mortgage. The mortgage’s annual interest rate is 4.82%. What will be Evan’s monthly blended principal and interest payment? N i PV PMT FV 10) Using the information from 9) above, determine how much of the total payment is principal? And how much of the total payment is interest? Prepare the amortization table for months 1, 2, and 3 Beginning Month 1 2 3 Principal Payment Interest Amortization Ending of Principle Principle
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1

Financial Concepts

Student’s name
Institution affiliation
Course code and title
Professor’s name
Date

2
Question 1
Financial calculator used; the Texas Instruments BA II Plus

N
70.292

i
0.3875%

PV
$21,500

PMT
$-350

FV
0

71 months

How (N) was calculated
Enter the number $21,500 and press PV
Enter 0.3875% and press 1/y
Enter $-350 and press PMT
Enter 0 and press FV
To solve, enter PMT and N
The answer is 70.292

Question 2

N
24

I
2.332%
27.984%

PV
$1,640

PMT
-$90

FV
0

3
How annual rate was calculated
Enter the number $1,640 and press PV
Enter $-90 and press PMT
Enter 0 and press FV
Enter 24 and press N
To solve, enter CPT and i
The answer is 2.332%
Annual interest rate is the monthly interest rate multiply by 12 months
2.332% x 12=27.984%

Question 3
N
3

i
7.2%

How PV was calculated
Enter the number -$16,500 and press FV
Enter 7.2% and press 1/y
Enter 0 and press PMT
Enter 3 and press N
Press CPT and PV to solve
The answer is $13,393.67

PV
$13,393.67

PMT
0

FV
-$16,500

4

Question 4

N
504

i
0.767%

PV
0

42 years into months
42x12= 504 months
Monthly interest rate is 9.2%/12= 0.767%
PV=0
PMT=?
FV=-$2,200,000
How PMT was calculated
Enter the number $2,200,000 and press FV
Enter 0.767% and press 1/y
Enter 0 and press PV
Enter 504 and press N
Press CPT and PMT to solve
The answer is $366.53

PMT
$366.53

FV
-$2,200,000

5
Question 5

N
72

i
4.8%

PV
$7,500

PMT
0

FV
$219,317.67

The value of the investment today is the (FV)
Enter 72 and press N
Enter 4.8% and press 1/y
Enter $7,500 and press PV
Enter 0 and press PMT
Press CPT and FV to solve
The answer is $219,317.67

Question 6

N
6

i
2.78%

How FV was computed

PV
$10,000

PMT
0

FV
$11,788.31

6
Enter 6 and press N
Enter 2.78% and press1/Y
Enter -$10,000 and press PV
Enter 0 and press PMT
Press CPT and FV to solve
The answer is $11,788.31

Question 7

N
12

i
1.39%

N will be 6 x 2= 12
The pay rate is 2.78/2=1.39%
How FV was calculated
Enter 12 and press N
En...


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