Question

You Are interested in buying a new sierra 1500 pickup truck. after all negotiations the total cost will be 48,250. As a down payment, you decide to pay $3250 today and finance the remainder with a 72 month loan at 3.24% APR compound monthly, with first payment due in 1 month. How much is your fixed monthly Loan Payment?

Your friend spends $5 per day on lattes at his favorite coffee shop. If he were, instead, to deposit that amount each day (starting tomorrow) into an account earning 3.65% APR compounded daily, how much would he have in 20 years?

Your client has $0 savings, but wants to start saving for retirement. How many years will it take him to reach $2,500,000 if he is willing to deposit $450 per month in a fund that should earn an effective annual rate of 10.05%?

Answer #1

Rate Per month =3.24%/12

Number of Months =72

Fixed Monthly Loan Payment =PV/((1-(1+r)^-n)/r)
=45000/((1-(1+3.24%/12)^-72)/(3.24%/12)) =**688.56**

2. Amount spent per day =5

Rate per day =3.65%/365

Number of days =20*365

FV =PMT*((1+r)^n-1)/r)
=5*((1+3.65%/365)^(365*20)-1)/(3.65%/365))=**53750.24**

3.FV =2500000

PMT per month =450

Rate per month =(1+Effective Annual Rate)^(1/12)-1
=(1+10.05%)^(1/12)-1 =0.80123133155241%

Number of Years using financial calculator

I/Y =0.80123133155241%;PMT=450;FV=-2500000;CPT N =478.4224

Number of years =478.4224/12 =**39.8685 or 39.87**
years

You are about to purchase a new car, which will cost you $18,000
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