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90. Given a 10 percent interest rate, compute the year 9 future value if deposits of $10,000
and $20,000 are made in years 1 and 5 respectively, and a withdrawal of $5,000 is made in year
7.
91. A car company is offering a choice of deals. You can receive $600 cash back on the
purchase, or a 2 percent APR, 4-year loan. The price of the car is $18,900 and you could obtain a
4-year loan from your credit union at 6 percent APR. What is the monthly payment of each deal?
92. A furniture company is offering a choice of deals. You can receive $100 cash back on the
purchase, or a 2 percent APR, 2-year loan. The price of the dining room set is $3,750 and you
could obtain a 2-year loan from your credit union at 6 percent APR. What is the cost per month of
each deal?
93. What is the amount of interest and repayment of principal balance in month 2 for a loan
of $10,000, paid monthly over five years at a 7 percent APR?
94. Jasmine has decided that she wants to build enough retirement wealth that, if invested at
6 percent per year, will provide her with $3,000 of monthly income for 30 years. To date, she has
saved nothing but she still has 25 years until she retires. Jasmine believes that she can earn 6
percent on her investments until she retires. How much money does she need to contribute per
month to reach her goal?
95. Jasmine has decided that she wants to build enough retirement wealth that, if invested at
6 percent per year, will provide her with $3,000 of monthly income for 30 years. To date, she has
saved nothing but she still has 25 years until she retires. Jasmine believes that she can earn 9
percent on her investments until she retires. How much money does she need to contribute per
month to reach her goal?
96. Chase purchased a $23,000 car three years ago using a 14 percent, 6-year car loan. He
has decided that he would sell the car now if he could get a price that would pay off the balance
of his loan. What is the minimum price Chase would need to receive for his car? (Assume
monthly payments.)
97. Chase purchased a $30,000 car three years ago using a 10 percent, 5-year car loan. He
has decided that he would sell the car now if he could get a price that would pay off the balance
of his loan. What is the minimum price Chase would need to receive for his car? (Assume
monthly payments.)
98. A mortgage broker is offering a $225,000 30-year mortgage with a teaser rate. In the first
two years of the mortgage, the borrower makes monthly payments on only a 2.5 percent APR
interest rate. After the second year, the mortgage interest rate charged increases to 8.5 percent
APR. What are the mortgage payments in the first two years? What are the mortgage payments
after the second year?
99. Consider that you are 30 years old and have just changed to a new job. You have $91,000
in the retirement plan from your former employer. You can roll that money into the retirement
plan of the new employer. You will also contribute $4,800 each year into your new employer's
plan. If the rolled-over money and the new contributions both earn a 7 percent return, how much
should you expect to have when you retire in 38 years?
100. Consider that you are 30 years old and have just changed to a new job. You have $91,000
in the retirement plan from your former employer. You can roll that money into the retirement
plan of the new employer. You will also contribute $400 each month into your new employer's
plan. If the rolled-over money and the new contributions both earn a 7 percent annual return,
how much should you expect to have when you retire in 38 years?
101. Your client has been given a trust fund valued at $1 million. She cannot access the
money until she turns 68 years old, which is in 12 years. At that time, she can withdraw $30,000
per month. If the trust fund is invested at a 7 percent interest rate, how many months will it last
your client once she starts to withdraw the money?
102. A local furniture store is advertising a deal in which you buy a $3,500 living room set with
three years before you need to make payments (no interest is incurred). How much would you
have to deposit each month in a savings account earning 3.5 percent APR, compounded monthly,
to be able to pay the $3,500 bill in three years?
103. A local furniture store is advertising a deal in which you buy a $3,500 living room set with
three years before you need to make payments (no interest is incurred). How much money would
you have to deposit now in a savings account earning 3.5 percent APR, compounded monthly, to
pay the $3,500 bill in three years?
104. You have secured a loan from your bank for two years to build your home. The terms of
the loan are that you will borrow $120,000 now and an additional $52,000 in one year. Interest of
9 percent APR will be charged on the balance monthly. Since no payments will be made during
the 2-year loan, the balance will grow. At the end of the two years, the balance will be converted
to a traditional 30-year mortgage at a 6.5 percent interest rate. What will you pay as monthly
mortgage payments (principal and interest only)?
105. Say that you purchase a house for $150,000 by getting a mortgage for $135,000 and
paying a $15,000 down payment. If you get a 15-year mortgage with a 6 percent interest rate,
what are the monthly payments?
106. Say that you purchase a house for $150,000 by getting a mortgage for $135,000 and
paying a $15,000 down payment. If you get a 15-year mortgage with a 6 percent interest rate,
what would the loan balance be in seven years?
107. Say that you purchase a house for $150,000 by getting a mortgage for $135,000 and
paying a $15,000 down payment. Assume you get a 15-year mortgage with a 6 percent interest
rate. If the house appreciates at a 2 percent rate per year, what will be the value of the house in
seven years? How much of this value is equity?
108. A small business owner visits his bank to ask for a loan. The owner states that she can
repay a loan at $1,250 per month for the next three years and then $500 per month for two years
after that. If the bank is charging customers 12 percent APR, how much would it be willing to lend
the business owner?
109. A small business owner visits his bank to ask for a loan. The owner states that she can
repay a loan at $1,500 per month for the next 3 years and then $500 per month for three years
after that. If the bank is charging customers 10 percent APR, how much would it be willing to lend
the business owner?
