ARE 142 Practice Questions _2 _10-20-2009_ Solutions

ARE 142 Practice Questions _2 _10-20-2009_ Solutions -...

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ARE 142 Personal Finance Fall 2009 - Heather Rose Practice Questions #2 These are questions from the lecture on 10-20-09. 1. You just bought a car for $20,000 with a 5 year loan at an annual interest rate of 6%. You make monthly payments starting at the end of the first month. A) What are the monthly payments? B) What is the total of all payments? C) What portion of the total is for principal? D) What portion of the total is for interest? 2. If you save $100/month for 40 years and can earn an 8% return, how much will you have 40 years from now? A) Assume you deposit all of the money for each year at the end of each year. B) Assume you make monthly deposits. 3. You just inherited $50,000. You would like to save some for a down payment on a house that you expect to buy 10 years from now. You expect to need a down payment of $60,000. How much of your inheritance should you save assuming you can earn 8% per year with
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Unformatted text preview: annual compounding. 4. If you deposit 2000 a year in a savings account that earns 10% interest, how much will you have: A) After 10 years assuming you start your payments at the end of the first year? B) After 10 years assuming you start your payments today (and continue to make a payment at end of year 10). Calculator note: if you set payments to beginning of period and n=10, it will tell you FV as of end of year 10, but it wont include deposit you make at end of year 10. If you set payments to beginning and n=11, it will tell you FV as of end of year 11. You would need to discount that to end of year 10. ARE 142 Personal Finance Fall 2009 - Heather Rose Answers Question 1 A) 386.66 B) 23,199.60 C) 20,000 D) 3,199.60 Question 2 A) 310,867.82 B) 349,100.78 Question 3: 27,791.61 Question 4 A) 31,874.85 B) 37,062.33...
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ARE 142 Practice Questions _2 _10-20-2009_ Solutions -...

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