Trust fund today in order to fund series of annual payments

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Reference no: EM131919584

1. Mike and Cindy are buying a new car, but they are on a budget. The think that they can afford to pay $540 per month for 5 years, based on an annual interest rate of 6.4 percent. How much can they afford to borrow, given this information? (Show your answer to the nearest dollar)

2. Fred is setting up a trust fund for his son. The trust will pay his son $6,000 each year for the next 20 years. If the trust fund earns 5.6 percent interest per year, how much does Fred have to put into the trust fund today in order to fund the series of annual payments? (Show your answer as a positive number).

Reference no: EM131919584

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