1. Jessica wants to accumulate $12,000 by the end of 4 years in a special bank account, which she had opened for this purpose. To achieve this goal, Jessica plans to deposit a fixed sum of money into the account at the end of the month over the 4-year period. If the bank pays interest at the rate of 6% per year compounded monthly, how much does she have to deposit each month into her account? (Round your answer to the nearest cent.)
2. The Sandersons are planning to refinance their home. The outstanding principal on their original loan is $130,000 and was to amortized in 240 equal monthly installments at an interest rate of 11%/year compounded monthly. The new loan they expect to secure is to be amortized over the same period at an interest rate of 7%/year compounded monthly. How much less can they expect to pay over the life of the loan in interest payments by refinancing the loan at this time? (Round your answer to the nearest cent.)
3. If Jackson deposits $120 at the end of each month in a savings account earning interest at a rate of 7%/year compounded monthly, how much will he have on deposit it his savings account at the end of 8 years, assuming he makes no withdrawals during that period? (Round your answer to the nearest cent.)
4. Suppose payments were made at the end of each month into an ordinary annuity earning interest at the rate of 9%/year compounded monthly. If the future value of the annuity after 15 years is $60,000, what was the size of each payment? (Round your answer to the nearest cent.)
5. The Flemings secured a bank loan of 5288,000 to help finance the purchase of a house. The bank charges interest at a rate of 12%/year on the unpaid balance, and interest computations are made at the end of each month. The Flemings have agreed to repay the loan in equal monthly installments over 25 years. What should be the size of each repayment if the loan is to be amortized at the end of the term?
6. The Johnsons have accumulated a nest egg of 515,000 that they intend to use as a down payment toward the purchase of a new house. Because their present gross income has placed them in a relatively high tax bracket, they have decided to invest a minimum of 51100/month in monthly payments (to take advantage of the tax deduction) toward the purchase of their house. However, because of other financial obligations, their monthly payments should not exceed $1400. If local mortgage rates are 8.5%/year compounded monthly for a conventional 30-year mortgage, what is the price range of houses they should consider? (Round your answers to the nearest cent.)
7. Find the periodic payment R required to amortize a loan of P dollars over t years with interest charged at the rate of r%/year compounded m times a year. (Round your answer to the nearest cent.)
P = 15,000, r = 10, t = 6, m = 6
8. The price of a new car is $32,000. Assume that an individual makes a down payment of 25% toward the purchase of the car and secures financing for the balance at the rate of 14%/year compounded monthly. (Round your answers to the nearest cent.)
(a) What monthly payment will she be required to make if the car is financed over a period of 24 months? Over a period of 36 months?
(b) What will the interest charges be if she elects the 24-month plan? The 36-month plan?