Suppose you are given $1000 to invest. You have two options: a savings bond that offers 10% simple interest, or a savings account that offers 6% annual interest, compounded monthly. (a) If you were going to invest the money for 5 years, which is the better choice? How much interest does each option earn over 5 years? (b) If you were going to invest the money for 10 years, which is the better choice? How much interest does each option earn over 10 years? (c) Which option do you expect to be the better investment in the long run? Explain your thinking

Q: Suppose an agent has $100,000 today that he wants to save for 10 years. Compare the following two…

A: Working #1 Computation of Total value after 10 years  of Bank A Bank A           All figures in…

Q: a) How much is the loan amount going to be? b) What will your monthly payments be? c) How much…

A: Loan payments can be paid off in periodic payments. To understand the periodic payments the loan…

Q: Suppose you want to purchase a $ 240000 house. If you put 20% down and finance the rest in a 25 year…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: You want to buy a $191,000 home. You plan to pay 15% as a down payment, and take out a 30 year loan…

A: Cost of home = $191,000Down payment = 15%Loan terms = 30 yearsInterest rate = 7%

Q: pose you take out a 45-year $125,000 mortgage with an APR of 6%. You make payments for 5 y PR of…

A: The given problem can be solved using PMT function in excel. PMT function computes installment…

Q: Suppose you take out a 25-year $100,000 mortgage with an APR of 6%. You make payments for 3 years…

A: When a loan's conditions, including its interest rate, payment schedule, or other terms, are…

Q: You want to buy a $240,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

A: Home value = $240,000 Down payment = $48,000 (i.e. $240,000 * 0.20) Monthly period (n) = 360 (i.e.…

Q: You plan on borrowing in order to buy a condo. You want to borrow for 30 years and make monthly…

A: Loan amount refers to an amount that is borrowed by the borrower from the lender at a specified rate…

Q: Suppose you take out a 25-year $100,000 mortgage with an APR of 6%. You make payments for 3 years…

A: As per our guidelines, we are supposed to answer only 3 sub-parts (if there are multiple sub-parts…

Q: You want to buy a $260,000 home. You plan to pay 5% as a down payment, and take out a 30 year loan…

A: a) Loan Amount = Total price of house - Down payment  = 260,000 - (260,000 * 5%) = 260,000 - 13,000…

Q: Suppose you take out a 45-year $250,000 mortgage with an APR of 6%. You make payments for 3 years…

A: A loan is a financial arrangement in which one or more people, companies, or other entities lend…

Q: A new investment opportunity for you is an annuity that pays $800 at the beginning of each year for…

A: Beginning of period Annuity Annuity Amount = 800 Time Period (N) = 3 years Rate = 5.5%

Q: You have $15,000 that you would like to invest for the next 32 years. One option is to invest the…

A: One way to calculate the future value of any invest is to calculate its value after specific period…

Q: You have a chance to buy an annuity that pays $50,000 at the beginning of each year for 15 years.…

A: Present value means today’s value of money you expect to receive or pay in future.   PV = PMT…

Q: An investor is considering an annuity that pays $40,000 per year for four years.  1. Assuming the…

A: (answer of first 3 parts, please specify if any other part is required) We can compute the present…

Q: Suppose you begin saving for your retirement by depositing $2,000 per year in an IRA. If the…

A: The future value is the amount that will be received at the end of a certain period. In simple…

Q: You deposit $100 today, $200 one year from now, and $300 three years from now. How much money will…

A: The concept of the time value of money states that the same amount of money today is worth more than…

Q: You are considering a mortgage for 30 years with initial value $280, 000, and annual interest rate…

A: The objective of the question is to determine how long it will take for the lower monthly payments…

Q: Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and…

A: A mortgage is a property loan given by banks to their customers for purchasing a house or other real…

Q: You are considering purchasing an annuity that would pay you $1,000 per year for 10 years. The…

A: Formula to find the present worth of annuity:- P= Amount (P/A,Rate%,time)

Q: You want to buy a $243.000 home. You plan to pay 10% as a down payment, and take out a 30 year loan…

A: Monthly payment refers to an amount that is paid every month for the repayment of a loan amount…

Q: You want to buy a $169,000 home. You plan to pay 20% as a down payment, and take out a 30 year loan…

A: Cost of home = $169,000Down payment = 20%Interest rate = 4.85%Number of years = 30 years

Q: You are planning to buy a house in 8 years. You would like to be able to make a down payment of…

A: Continuous compounding is often used in financial calculations because it simplifies mathematics and…

Q: You have to choose between three different investment options. Which one is the best if you are…

A: The FV of an investment refers to the combined value of the cash flows at a particular future date…

Q: Assume you want to borrow $300,000 and have been presented with two options. The first option is a…

A: Amortization of loan is the process of repayment of loan. In the amortization of the loan. principal…

Q: A borrower is purchasing a property for $200,000 and can choose between two possible loan…

A: Present value of annuity Annuity is a series of equal periodic payments at equal interval over a…

Q: An investment opportunity requires that you deposit $1000 a year for 5 years. At the end of this…

A: Using excel PV and FV function

Q: You are looking to invest your savings and want to earn a 10% annualized return. You can choose from…

A: The idea of present value, in finance, is to determine the worth of future cash flows or a series of…

Q: Suppose you take out a 30 year mortgage for $ 250000 at 6.75% interest. The monthly payments on this…

A: GIVEN, PMT = $1621.50 LOAN AMOUNT (P) =$ 250,000 N = 30 YEARS R = 6.75% IF YOU PAY 40% EXTRA YOUR…

Q: You want to buy a $220000 home with a down payment of  $66000  and take out a 30 year loan at 3.75%…

A: A mortgage refers to a covered loan that is borrowed for purchasing a property with the property…