1) Your parents will retire in 27 years. They currently have $320,000 saved, and they think they will need $2,350,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places.
2) Simon recently received a credit card with an 19% nominal interest rate. With the card, he purchased an Apple iPhone 5 for $400. The minimum payment on the card is only $20 per month.
a) If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Do not round intermediate calculations. Round your answer to the nearest month.
b) If Simon makes monthly payments of $60, how many months will it be before he pays off the debt? Do not round intermediate calculations. Round your answer to the nearest month.
c) How much more in total payments will Simon make under the $20-a-month plan than under the $60-a-month plan. Do not round intermediate calculations. Round your answer to the nearest cent.
3) You want to buy a car, and a local bank will lend you $20,000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 12% with interest paid monthly.
a) What will be the monthly loan payment? Do not round intermediate steps. Round your answer to the nearest cent.
b) What will be the loan's EAR? Do not round intermediate steps. Round your answer to two decimal places.