Serenity Witten
AGEC 424
TVM-1 (5
th
edition)
11.
How much will $650 per year be worth in eight years at interest rates of
a. 12%?
b. 8%?
c.6%?
N
I
PV
PMT
FV=?
8
12%
0
650
$7994.80
8
8%
0
650
$6913.81
8
6%
0
650
$6433.35
16. Construct an amortization schedule for a four-year, $10,000 loan at 6% interest
compounded annually.
N=4
I=6
PMT = $2,885.92
PV=10000
Year
Beg Bal
PMT
INT
Prin Red
End Bal
1
$10,000.00
$2,885.92
$600.00
$2,285.92
$7,714.08
2
7,714.08
2,885.92
462.84
2,423.08
5,291.00
3
5,291.00
2,885.92
317.46
2,568.46
2,722.54
4
2,722.54
2,885.92
163.35
2,722.54
0.00
25.
Adam Wilson just purchased home and took out a $250,000 mortgage for 30 years at
8%, compounded monthly.
a.
How much is Adam’s monthly mortgage payment?
n= 360
I=8/12
PV= $250,000
FV=0
?PMT= $1,834.41
b.
How much sooner would Adam pay off his mortgage if he made an additional $100
payment each month?
Add $100 to Payment
I= 8/12
PV= $250,000
PMT= $1931.41
FV=0
?n= 297.62 ~ 298