Quiz 3 sec 2 (1)

Quiz 3 sec 2 (1) - Write an expression for the lump sum of...

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IE 343 Spring 2010 Name: Section 2, Quiz 3 (last) (first) Closed book, closed notes. No calculators. 1. Imagine you are a parent, and your child is going to college next year. Tuition fees amount to $18,000 a year for 4 years. You plan on depositing a lump sum of money today in a bank account paying 5% interest a year, so that you can make these annual tuition fee payments. The first tuition fee payment you make will be a year from now. Draw a cash-flow diagram depicting cash deposits and withdrawals into the bank account (from your point of view).
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Unformatted text preview: Write an expression for the lump sum of money you deposit now in order to fund these annual tuition fee payments. 2. Youve just bought a house worth $250,000 here in West Lafayette. As part of the mortgage deal, you have to make a down payment of 20% now. The remaining amount must be paid in equal annual installments for 30 years at the rate of 6% compound interest per year. Write an expression for your annual mortgage payments. Please write any concerns/comments on the back....
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