Lecture Notes Oct 0509

# Lecture Notes Oct - Cost 80,000.00 Down 8,000.00 8,000.00 72,000.00 1 1,459.90 480.00 979.90 71,020.10 2 1,459.90 473.47 Suzie want to have

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Extra Calculator Problems Eric wants to buy a new Mercedes. The cost is \$80,000. Eric will put 10% and pay the rest in 5 equal annual payments which include interest at 8%. How much are the payments? \$ 18,032.86 If Eric amortizes the above loan correctly, what would be the interest expense for the second year? Year Payments Interest 8% Principal Ending Principal Balance Cost 80,000.00 Down 8,000.00 8,000.00 72,000.00 1 18,032.86 5,760.00 12,272.86 59,727.14 2 18,032.86 4,778.17 13,254.69 46,472.45 3 18,032.86 3,717.80 14,315.06 32,157.39 4 18,032.86 2,572.59 15,460.27 16,697.12 5 18,032.86 1,335.77 16,697.09 .03 rounding If Eric amortizes the loan correctly, what would be the principal balance after the third payment? \$ 32,157.39 If Eric made 60 monthly payments (deal still the same, 10% down and 8% interest), what would be the amount of the each payment? \$ 1,459.90 Still on monthly payments, what would be the interest expense for the second month? Month Payment Interest 8% Principal Ending Principal Balance
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Unformatted text preview: Cost 80,000.00 Down 8,000.00 8,000.00 72,000.00 1 1,459.90 480.00 979.90 71,020.10 2 1,459.90 473.47 Suzie want to have \$1,000,000 in the bank in thirty years. If the bank pays interest at 6% compounded semi-annually, how much does she need to deposit today to reach her goal? \$ 169,733.09 Cindy wants to withdraw \$1,000 per month for the next 5 years. She will withdraw her first amount in one month. The bank pays interest at 12% compounded monthly. How much does she need to deposit today to do this? \$ 44,955.04 Heather hit the lottery!! She has the option of taking 560,000 today or 100,000 per year for the next 8 years of \$1,000,000 in ten years. If she can deposity her money at 8%, ignoring taxes, which deal should she take? Options Present Value \$ 560,000 cash today \$ 560,000.00 \$ 100,000 per year for next 8 years 574,663.89 Highest \$ 1,000,000 ten years from today 463,193.49...
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## This note was uploaded on 09/12/2010 for the course ACCT 101 taught by Professor Drkirch during the Spring '10 term at Ohio University- Athens.

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