4. A friend wants to retire in 30 years when he is 65. At age 35, he can invest $600/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $1,500/month to catch up, earning the same 6% per year. He feels that by investing over twice as much for half as many years (15 instead of 30 years) he will have more. A. What is the future value of each of these options at age 65, and under which scenario would he accumulate more money? Scenario A: $ _________, Scenario B: $___________ , Best:_________ B. He has decided he wants to save $1,000,000 before he retires. If he saves for 30 years, earning 6%, how much must he save each month to retire with a million dollars Monthly Savings $________ 5. TV’s R Yours is advertising a deal, in which you buy a flat screen TV/entertainment package for $1,205 (including tax) with one year before you need to pay (no interest is incurred if you pay by the end of the one year). How much would you need to deposit at the end of each month in a savings account earning 0.9% APR (NOT 9%), compounded monthly, to be able to pay the $1,205 bill in one year? Monthly Deposit: __________ 6. You purchase a house for $250,000 by getting a mortgage for $200,000 and paying a $50,000 down payment (20%). You can get a 30 year mortgage with a 3.0% interest rate. What would be your monthly payment? ________
4. A friend wants to retire in 30 years when he is 65. At age 35, he can invest $600/month that earns 6% each year. But he is thinking of waiting 15 years when he is age 50, and then investing $1,500/month to catch up, earning the same 6% per year. He feels that by investing over twice as much for half as many years (15 instead of 30 years) he will have more.
A. What is the
Scenario A: $ _________, Scenario B: $___________ , Best:_________
B. He has decided he wants to save $1,000,000 before he retires. If he saves for 30 years, earning 6%, how much must he save each month to retire with a million dollars
Monthly Savings $________
5. TV’s R Yours is advertising a deal, in which you buy a flat screen TV/entertainment package for $1,205 (including tax) with one year before you need to pay (no interest is incurred if you pay by the end of the one year). How much would you need to deposit at the end of each
month in a savings account earning 0.9% APR (NOT 9%), compounded monthly, to be able to pay the $1,205 bill in one year?
Monthly Deposit: __________
6. You purchase a house for $250,000 by getting a mortgage for $200,000 and paying a $50,000 down payment (20%). You can get a 30 year mortgage with a 3.0% interest rate.
What would be your monthly payment? ________
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