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Chapter 8: Problem 29
Solve for \(P: A=P(1+r t)\).
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In Exercises 11-18, a. Determine the periodic deposit. Round up to the nearest dollar. b. How much of the financial goal comes from deposits and how much comes from interest? $$ \begin{array}{|l|l|l|l|} \hline \$ \text { at the end of every three months } & 3.5 \% \text { compounded quarterly } & 5 \text { years } & \$ 20,000 \\ \hline \end{array} $$
In Exercises 1-10, use $$ P M T=\frac{P\left(\frac{r}{n}\right)}{\left[1-\left(1+\frac{r}{n}\right)^{-n t}\right]} $$ Round answers to the nearest dollar. Suppose that you borrow \(\$ 10,000\) for four years at \(8 \%\) toward the purchase of a car. Find the monthly payments and the total interest for the loan.
In Exercises 1-10, a. Find the value of each annuity. Round to the nearest dollar b. Find the interest. $$ \begin{array}{|l|l|l|} \hline \begin{array}{l} \$ 4000 \text { at the end of } \\ \text { each year } \end{array} & \begin{array}{l} 5.5 \% \text { compounded } \\ \text { annually } \end{array} & 40 \text { years } \\ \hline \end{array} $$
Suppose that you earned a bachelor's degree and now you're teaching high school. The school district offers teachers the opportunity to take a year off to earn a master's degree. To achieve this goal, you deposit \(\$ 2500\) at the end of each year in an annuity that pays \(6.25 \%\) compounded annually. a. How much will you have saved at the end of 5 years? b. Find the interest.
Suppose that you are buying a car for \(\$ 56,000\), including taxes and license fees. You saved \(\$ 8000\) for a down payment. The dealer is offering you two incentives: Incentive \(\mathrm{A}\) is \(\$ 10,000\) off the price of the car, followed by a four-year loan at \(12.5 \%\). Incentive \(\mathrm{B}\) does not have a cash rebate, but provides free financing (no interest) over four years. What is the difference in monthly payments between the two offers? Which incentive is the better deal?
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