Decided to pay for your living expenses using credit card

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Reference no: EM131975765

You have just entered an MBA program and have decided to pay for your living expenses using a credit card that has no minimum monthly payment. You intend to charge $1,000 per month on the card for the next 21 months. The card carries a monthly interest rate of 1%. How much money will you owe on the card 22 months from now, when you receive your first statement post-graduation?

1. You are thinking of purchasing a house. The house costs $350,000. You have $50,000 in cash that you can use as a down payment on the house, but you need to borrow the rest of the purchase price. The bank is offering a 30year mortgage that requires annual payments and has an interest rate of 7% per year. What will your annual payment be if you sign up for this mortgage?

2. You are 35 years old, and decide to save $7,500 each year (with the first deposit one year from now), in an account paying 7% interest per year. You will make your last deposit 30 years from now when you retire at age 65. During retirement, you plan to withdraw funds from the account at the end of each year (so your first withdrawal is at age 66). What constant amount will you be able to withdraw each year if you want the funds to last until you are age 95 ?

3. You have an investment opportunity that requires an initial investment of $6,500 today and will pay $8,000 in one year. What is the IRR of this opportunity? The internal rate of return (IRR) is --------

Reference no: EM131975765

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