1. You have $35,000 you want to invest for the next 20 years to help with retirement. An investment plan is presented with a 9% payout over the first 10 years, followed by a 15% payout for the final 10 years. What is the total at the end of the full 20 years? Share how your calculations. Would the amount be different if it paid you 15% per year for the first 10 years and 9% per year for the next 10 years? Explain why or why not?
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1. You have $35,000 you want to invest for the next 20 years to help with retirement. An investment plan is presented with a 9% payout over the first 10 years, followed by a 15% payout for the final 10 years. What is the total at the end of the full 20 years? Share how your calculations. Would the amount be different if it paid you 15% per year for the first 10 years and 9% per year for the next 10 years? Explain why or why not?
2. Finding the time necessary until you pay off a loan is simple if you make equal payments each month. However, when paying off credit cards many individuals only make the minimum monthly payment, which is generally 1% to 2% of the balance or $25 whichever is greater. Locate the credit card calculator at www.fincalc.com and work out this exercise:
a) You currently owe $25,000 on a credit card with a 16% interest rate and a minimum payment of $25 or 1% of your balance.
b) How soon will you pay off this debt if you make the minimum payment each month?
c) How much total interest will you pay using that method?
d) Calculate how soon you would pay off this debt if you paid $250 per monthly payment.
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