Present value of an annuity stream-time value money

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Reference no: EM13809615

This assessment has two parts both addressing the subject of Time Value Money (TVM). Both parts should be submitted in the same paper. You will be graded on the accuracy of your answers. Cite your work, including your textbooks, use APA.

Part 1

The main TVM problems relating to healthcare are: a) present value of a lump sum b) present value of an annuity stream c) future value of a lump sum d) future value of an annuity stream. Provide an example of each of these TVM problems.

Part 2:

The Smith family is interested in buying a home. The family is applying for a $200,000 30-year mortgage. Under the terms of the mortgage, they will receive $200,000 today to help purchase their home. The loan will be fully amortized over the next 30 years. Current mortgage rates are 7.5%. Interest is compounded monthly and all payments are due at the end of the month. What is the monthly mortgage payment?

Miriam has saved $5,000 and intends to use his savings as a down payment on a new car. After careful examination of his income and expenses, She has concluded that the most he can afford to spend every month on his car payment is $425. The car loan that she uses to buy the car will have an APR of 10%. What is the price of the most expensive car that Henry can afford if he finances his new car for 48 months?

Reference no: EM13809615

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