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Assignment 6 |
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Assignment 6 |
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1. You put $600 in a savings account with an APR of 4.2% that compounds quarterly. Assume you do not make any other deposits or withdrawals
a. How much money is in the account after 3 years? Either copy and paste your table or show your calculation.
b. About how long will it take for your money to double?
2. Assume you are currently 18 years old and plan to retire at 65. You deposit $3000 in a saving account that compounds annually with an APR of 8.3%. How much money will you have when you retire (assuming you make no other deposits or withdrawals)?
3. You have a choice between two savings accounts: one that compounds annually with an APR of 5.7% and another that compounds monthly with an APR of 5.67%. What is the APY for each account? Which one would you choose? Show your calculations.
4. You are interested in buying a new home that costs $280,000. The mortgage company requires a down payment of 15% of the cost of the home. You will borrow the rest. The mortgage company offers you 2 options. Option 1 is a 15 year loan with an APR of 6.75% and option 2 is a 30 year loan with an APR of 5.55%.
a. For each option, find the monthly mortgage payment, the total amount paid back and the total amount of interest paid. Write these in your Word document.
b. Which option would you choose and why?
