MAT 143 9.3 Saving Money

MAT 143 9.3 Saving Money

by Dr. Mac

Open Ended

Use the formula for present value of money to calculate the amount you need to invest now in one lump sum:

$25,000 after 10 years with an APR of 12% compounded monthly

Open Ended

Use the formula for present value of money to calculate the amount you need to invest now in one lump sum:

$1,000,000 after 40 years with an APR of 10% compounded monthly

Open Ended

Alexis and Will are purchasing a home. They wish to save money for 10 years and purchase a house that has a value of $180,000 with cash. If they deposit money into an account paying 12% interest, how much do are the monthly payments?

Open Ended

Marilyn wishes to retire at age 65 with $2,000,000 in the bank. At the age of 21, she decides to begin depositing money into an account with an APR of 11%. What is the monthly payment Marilyn must make in order to make this happen?

Open Ended

Suppose you wish to retire at the age of 65 with $80,000 in savings. Determine your monthly payments into an Individual Retirement Account (IRA) if the APR is 7.5% and you begin making payments at 40 years old.

Open Ended

Revere College predicts that in 18 years it will take $200,000 to attend the college for four years. Debbie wishes to save money for her child's college fund. How much should Debbie put aside in an account with an APR of 9% compounded monthly in order to have $200,000 in the account in 18 years?

Open Ended

Suppose you would like to save enough money to pay cash for your next car. The goal is to save an extra $26,000 for the next 6 years. What amount of money of quarterly payments must you make into an account that earns 5.5% interest in order to reach your goal?

Open Ended

Willie deposits a fixed monthly amount into an annuity account for his child's college fund. He wishes to accumulate a future value of $75,000 in 15 years. Assuming an APR of 3.5%, how much money should Willie deposit monthly in order to reach his goal?

Open Ended

Blake starts an IRA to save for retirement at the age of 22. He deposits $450 each month. The IRA has an average annual interest rat of 7%.

a. How much money will he have saved upon retirement at the age of 65?

b. Determine the amount of money Blake deposited over the length of the investment and how much he made in interest.

Open Ended

Jimmie has a job at an advertising agency earning $54,000 per year. Jimmie is currently 26 years old and wishes to retire at age 67 with a retirement income of $75,000.

How much money would Jimmie need to invest each month into a growth stock mutual fund with an interest rate of 6.5% in order to withdraw $75,000 per year without reducing his principal?