{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# TVM-1 - Serenity Witten AGEC 424 TVM-1(5th edition 11 How a...

This preview shows pages 1–2. Sign up to view the full content.

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

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
c. Assume Adam makes his normal mortgage payments at the end of the five years, he refinances the balance of his loan at 6%. If he continues to make the same mortgage payments, how soon after the first five years will he pay off his mortgage? n= 5x12= 60 I=8/12 PV=\$250,000 PMT= \$1834.41 ?FV= \$237,674.64 ?n= 209.25 ~ 209 I=6/12= .5 PV=\$237,674.64 PMT= \$1834.41 FV= 0 ?N=209.25 The mortgage would be paid off 91 days earlier.
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern