# HW2 - currently invested if she takes half of the money...

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Karina Santana Personal Finance HW2: Chapter 3: Case 1 September 11, 2011 Question 2 Calculate the Amount that Jinhee needs to save each year for the down payment on a new car, assuming she can earn 6% on her savings. Calculate how much she will need to save on a monthly basis assuming monthly compounding. For each scenario, how much of her down payment will come from interest earned? If Jinhee wants to make a down payment of \$7,000 in three years for a car than she has to save \$2,198.49 annually. So, \$2198.49 * 3 years equals 6595.47. If we subtract \$6,595.47 from \$7,000 we get 404.53 which is the interest earned. Question 3 What will be the value of Jinhee’s trust fund at age 60, assuming she takes possession of half of the money at age 30 for a house down payment, and leaves the other half of the money untouched where it is

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Unformatted text preview: currently invested? if she takes half of the money than she will only have \$25,000 before taxes. Assuming that this money goes untouched until she is 60 and at a 7% interest than Jinhee will have 190,300. WE get this answer by looking at appendix A. we multiply 25,000*7.612= 190,300. Question 4 What is Paul’s annual payment if he wants to repay his student loans completely within ten years and he pays a 5.0 percent interest rate? How much more or less would Paul pay if the loans compounded interest on a monthly basis and Paul also paid the loans on a monthly basis Paul’s annual payment in order to repay his loans completely within 10 years at a 5% interest rate is \$12,950. We use appendix D. The principal is 100,000 by 7.722 interest which equals 12,950....
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## This note was uploaded on 10/12/2011 for the course BUSN 2300 taught by Professor Davidoff during the Fall '11 term at CUNY Brooklyn.

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HW2 - currently invested if she takes half of the money...

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