Finance Rev2 in class

Finance Rev2 in class - Suppose you make a 5% down payment...

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MGF 1107 Chapter 3 Review Simple Interest: F = P + Pr t Compound Interest: F = P 1 + r n nt In each problem show your work clearly (including your answers) If you use a formula show the formula written with the values substituted into it before giving the final value. If you use the Finance menu on the calculator to do the calculations you must show the values that you substitute into the menu. Also write your answers to the question in sentence form. 1. Suppose you deposit $2000 into an account that earns interest at a 5% annual interest rate. How much money will be in the account after 20 years with each of the following methods? A) simple interest B) interest compounded monthly 2. Suppose that $1000 is put into an account with 8% annual interest compounded monthly for 15 years. What interest rate would give the same amount of money after 15 years if the simple interest method is used? 3. Suppose you are planning to buy a new car that costs $20000.
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Unformatted text preview: Suppose you make a 5% down payment and get a loan for the remainder. The loan is at 6.2% annual interest compounded monthly for 6 years. A) What is the down payment required and how much must be borrowed? B) What will be the monthly payment? C) What is the total amount of money repaid in payments over the 6 years? D) How much of the total repaid in part C will have been interest? E) If they paid an extra $50 per month how long would it take them to pay off the loan? 4. Suppose a couple plans to start a savings plan for their daughter's college. They will deposit 100 monthly for 10 years into an account that has an 8% interest rate compounded monthly. At the end of the ten -year period, they take that money and put it into an account earning compound interest at 5%, compounded monthly, for 8 years. How much money will the couple have at the end of the 18 years?...
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