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

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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

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c. Assume Adam makes his normal mortgage payments at the end of the five years, he
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## This note was uploaded on 11/08/2010 for the course AGEC 424 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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TVM-1 - Serenity Witten AGEC 424 TVM-1 (5th edition) 11....

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