Question

14. If you have $15,000 in an account that has been paving an annual rate of 6%, compoundco continuously, Since you deposited some funds 10 years ago, how much was the original deposit a b. c. $12.990 $14,126 $10,840 $8,376 58,232 Your firm has recently borrowed $100.000 from a local bank at an interest rate of 6 percent. The loan is to be repaid in 5 equal, end-of-year payments. The following is a partial amortization schedule for the loan. Year Payment 2 $ 23,740 $ 23,740 $ 23,740 $23.740 $ 23,740 Principal Interest RadioBalance Reduction $ 100.000 S 6,000 $17,740 $ 82,260 $ 4,936 SA $ 63,456 $ B $ 19932 $ 43,524 $ 2.611 $21,128 $ 22,396 $ 1.344 22 396 $ 0 4 15. The missing value for the Principal Reduction in the second year (labeled A) is: $19,079 $18,409 $18,804 d. e $18,338 $18,550 16. The missing value for the Interest Payment in the third year (labeled B) is: a b. c. $ 3,807 $ 3,248 $ 3.000 d. e. $ 4,300 S 3,944 17. Fred Johnson is retiring one year from today. How much should Fred currently have in a retirement account earning 4 percent interest to guarantee withdrawals of $60,000 per vear for 20 years? b. $1,660,274 S 815,420 $1,200,000 d. e. $1,786,685 S 848,036

Answer 1

Ans 14 Interest Rate = 6% Compounded annualy Invested andount = 2 (A) Current value of Investment = 15000 No of year = 10 1500e = a (1+ 365 your continous compound A = Pert P 20.06x 0 15000 = P = 8232.17 Deres Ans is year Interest Payment Prinuple Reduction Balance To 2 23740 6000 17740 23740 4936A 23740 B 19932 23740 2611 21128 23740 1344 22396 100000 82260 63456 43524 22396 4 A= Payment – Interest = 23740 - 4936 = $ 18804

Anold B = Interest we pay interest on Balance amount ie ß= 63456 x 6% = 3807.36 in 38087 3807 We can cross Check this Principle reduction = payment - Interest 19932 = 23740 Interes of = 23740 - 19932 = 3800 And 17 FU= PMI ((1+1)"-1) PMT = 6oooo i = 41 n= 20 year Fu= 60000 ((1+0.04) 207) 0.04 - $1786685