Question

In the following ordinary annuity, the interest is compounded with each payment, and the payment is made at the end of the compounding period. Find the required payment for the sinking fund. (Round your answer to the nearest cent.) Monthly deposits earning 4% to accumulate $7000 after 10 years.

Just before his first attempt at bungee jumping, John decides to buy a life insurance policy. His annual income at age 30 is $35,000, so he figures he should get enough insurance to provide his wife and new baby with that amount each year for the next 35 years. If the long-term interest rate is 6.3%, what is the present value of John's future annual earnings? (Round your answer to the nearest cent.) $___________

Rounding up to the next $50,000, how much life insurance should he buy? (Round your original answer to the nearest $50,000.)
$  

Use the "rule of 72" to estimate the doubling time (in years) for the interest rate, and then calculate it exactly. (Round your answers to two decimal places.)

7.4% compounded weekly.

rule of 72"	yr
exact answer

Answer 1

1) No. of months 120

Monthly interest rate 0.0033

Monthly deposit $47.54 =-PMT(4%/12,120,,7000,)

2) No. of yrs 35.00

Per period payment 35000

Interest rate 6.30%

PV $490,082.41 =-PV(6.3%,35,35000,,)

Rounding $500,000.00

3) Rule of 72 9.73 =72/7.4

Exact answer 9.71 =LOG(2,10)/LOG(1+7.4%,10)