You Need Accumulate $10,000. to Do So, You Plan to Make Deposits of $1,250 Per Year, With

Chapter 2

Quiz 2

You need accumulate $10,000. To do so, you plan to make deposits of $1,250 per year, with the first payment being made a year form today, in a bank account that pays 12% interest, compounded annually. Your last deposit will be less than $1,250 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal, and how large will the last deposit be?

Your Aunt Madge sold her house on December 31, and she took a mortgage in the amount of $10,000 as part of the payment. The mortgage has a quoted interest rate of 10%, but it calls for payments every 6 months, beginning on June 30, and the mortgage is to be amortized over 10 years. Now, one year later, your aunt must file schedule B of her tax return with the IRS, informing them of the interest that was included in the 2 payments made during the year. To the closest dollar, what is the total amount of interest that was paid during the first year?

Your company is planning to borrow $1,000,000 on a 5-year, 15%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal?

You just started your first job, and you want to buy a house within 5 years. You are currently saving for the down payment. You plan to save $6,000 the first year. You also anticipate that the amount you save each year will rise by 10%, 12% for the next two years, and finally 15% as your salary increases over time. Interest rates are assumed to be 6%, and all savings occur at year end. How much money will you have for a down payment in 5 years?