Problem 6-26 Calculating Annuity Present Values [LO1] Beginning three months from now, you want to be able to withdraw $2,400 each quarter from your bank account to cover college expenses over the next three years. If the account pays 46 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next three years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present value

QUESTION 31 After he retires, Dewey would like to be able to withdraw $1,250 every week for a total of 30 years after he retires. If the account earns 5% interest, how much will Dewey need in his retirement account when he retires? Give your answer to the nearest dollar. Summarize the information provided, stating the interest rate in a decimal form. d = r = k = N = Identify the formula you will use to solve by writing the letter of the formula here: A. A = Po(1 + rt) B. PN = Po(1 + /k) Nk C. PN = d((1 + /k)Nk – 1) ("/k) %3D D. Po = d(1 - (1 +/k¬Nk) + ("/k) Solve the problem and give your answer here:

Problem 5-26 Calculating Annuity Present Values [LO 1] Beginning three months from now, you want to be able to withdraw $3,400 each quarter from your bank account to cover college expenses over the next four years. If the account pays 74 percent interest per quarter, how much do you need to have in your bank account today to meet your expense needs over the next four years? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Amount needed

13Assume you plan to borrow $400,000 from your bank to buy a home. The bank offers: • a 5-year fixed rate of 6.05%, compounded monthly. • a 3-year fixed rate of 5.75%, compounded monthly. If you choose to repay the borrowing in equal installments monthly over a 20 years, what would be the difference between your monthly payments at the two different APRs? a. $89.32 b. $68.94 c. $26.98 d. $154.58   14You expect that the interest rate will decrease in the near future, therefore you eventually choose the 3-year fixed rate. Then, what will be your mortgage balance after 3 years? a. $321,598.59 b. $452,321.21 c. $365,056.12 d. $379,325.89     15Three years passed, it's time to renew your mortgage. Upon your renewal, your bank is now offering a new 3-year fixed rate of 4.5%, what would be your monthly repayment amount after renewal? a. 2825.32 b. 2598.54 c. 1965.21 d. 2563.60

Chapter 7 Self Test Problem #2

Question 5 of 10 You plan to save money for a down payment of $37,000 to purchase an apartment. You can only afford to save $1,250 at the end of every quarter into an account that earns interest at 3.71% compounded annually. How long will it take you to save the planned amount? o years o months Express the answer in years and months, rounded to the next payment period SUBMIT QUESTION k SU 1 O 0 SAVE PROGRESS

QUESTION 14 What’s the interest rate of a 8-year, annual $3,500 annuity with present value of $20,000? (Use a time value of money calculator or a spreadsheet. Round your answer to 2 decimal places.) ANNUITY INTEREST RATE                %