How much must you invest today to achieve result

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Reference no: EM132028973

1. You want to establish today a 4-year college annuity for your young niece with the first payment starting 18 years from year from now. The initial annuity payment will be $50,000 but needs to grow by 10% per year. Assume prevailing interest rates of 5%. How much must you invest today to achieve this result?

2. You bought a house for 150,000. The bank required a 20% down payment and gave you a 30-year mortgage loan for the remainder. Assume an annual interest rate of 3.5% and a monthly repayment schedule. What is your monthly payment? After 18 years of payments, how much do you still owe?

3. You have a credit card with a current balance of $5000. Your annual percentage rate is 15%.

a. What is your monthly payment if you want to have a zero balance in 5 years?

b. If you refinance today for a new card at an APR of 12% and keep the payment the same as in A above, how long will it take to pay off the balance?

Reference no: EM132028973

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