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Mathematics Clinic => Grade 11 and 12 Mathematics => Topic started by: jake on Jun 6, 2019

Title: Janice plans to retire in 10 years and would like to receive $3000.00 per month for fifteen years ...
Post by: jake on Jun 6, 2019

Question 1

If a loan was repaid by ordinary yearly payments of $2000.00 in five years at 9.00%, compounded yearly, how much interest was paid?

Question 2

Janice plans to retire in 10 years and would like to receive $3000.00 per month for fifteen years starting at the end of the first month after her retirement. Calculate the amount she must invest now if interest is 7.5% compounded monthly.

Title: Janice plans to retire in 10 years and would like to receive $3000.00 per month for fifteen years ...
Post by: smrerig on Jun 6, 2019

Answer 1

PVn = 2000.00 = 2000.00(3.88965126) = $7779.30
Interest: 2000.00(5) -7779.30 = 10000.00 -7779.30 = $2220.70

Answer 2

Step 1:

PMT = 3000.00; n = 15(12) = 180; I/Y = 7.5; P/Y = C/Y = 12;

i = = 0.625% = 0.00625
PV = PMT = 3000 = $323 620.28

Step 2:

FV = 323620.28; n = 10(12) = 120

PV = 323620.28(1.00625)^-120 = $153 224.61

Programmed solution:

Title: Re: Janice plans to retire in 10 years and would like to receive $3000.00 per month for fifteen year
Post by: christoph.camposo@outlook on Dec 1, 2022

Thank you