4. After working for 40 years, you decide to retire. Suppose you set up your account as a perpetuity on retirement paying an APR of 6% compounded monthly. If the value of your nest egg (that is, the present value) is the amount found in question #1, what will be your monthly income? 5. Lending agencies usually require that no more than 28% of the borrower’s monthly income be spent on housing. Given the monthly income from question 4, the amount that could be spent on housing would be $_________. 6. The amount we spend on housing consists of our monthly mortgage payment plus property taxes and property insurance. Assume that property taxes plus insurance equals $250 per month. a) What percentage of our monthly income is $250? b) Determine the monthly mortgage payment we can afford after paying the property tax and home insurance.
Investment: You began saving for retirement at age 25 by contributing $550 per month at an
APR of 6% compounded monthly. You plan to retire at the age 65 and live on your retirementnest egg.
(1) How much money is in your account on retirement at age 65? answer is $1,095,319.90
4. After working for 40 years, you decide to retire. Suppose you set up your account as a
perpetuity on retirement paying an APR of 6% compounded monthly. If the value of
your nest egg (that is, the
be your monthly income?
5. Lending agencies usually require that no more than 28% of the borrower’s monthly
income be spent on housing. Given the monthly income from question 4, the amount
that could be spent on housing would be $_________.
6. The amount we spend on housing consists of our monthly mortgage payment plus
property taxes and property insurance. Assume that property taxes plus insurance
equals $250 per month.
a) What percentage of our monthly income is $250?
b) Determine the monthly mortgage payment we can afford after paying the property
tax and home insurance.
7. If you can afford to pay the monthly payment from the above calculation, how much can
you borrow? Assume that the term is 20 years and the interest rate is 6.25%.
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$5476.6 monthly
If you can afford to pay the monthly payment from the above calculation, how much can you borrow? Assume that the term is 20 years and the interest rate is 6.25%.
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