Determine the amount saved if 375 is deposited

Determine the amount saved if $375 is deposited every month for 6 years at 5. 9% per year compounded monthly. N = 12 X 6 = 72 I% = 5. 9 PV = 0 PMT = -375 FV = 32302. 36 P/Y = 12 C/Y = 12 How much interest was earned? 32302 – 72 x 375 =$5302. 35

Geneva’s parents saved for her college education by depositing $1200 at the end of each year in a Registered Education Savings Plan (RESP) that earns 6% per year compounded annually. How much is there at the end of 18 years? N = 18 I% = 6 PV = 0 PMT = 1200 FV = 37086. 78 P/Y = 1 C/Y = 1 How much interest has been earned? 37086. 78 – 18 x 1200 =$15486. 78

Use the formula to solve: Victor wants to withdraw $700 at the end of each month for 8 months, starting 1 month from now. His bank account earns 5. 4% per year compounded monthly. How much must Victor deposit in his bank account today to pay for the withdrawls? i = 5. 4 ÷ 12 ÷ 100 =. 0045 n=8 Use PV formula: answer is $5488. 28

Use the formula to solve: Suppose $450 is deposited at the end of each quarter for 1. 5 years in an investment account that earns 10% per year compounded quarterly. How much money is in the account? i = 10 ÷ 4 ÷ 100 = 0. 025 n = 4 X 1. 5 = 6 Calculate for the answer: Use A= formula $2874. 48 How much interest is earned for this investment? 2874. 48 – 6 x 450 =$174. 48

Donald borrows $1200 from an electronics store to buy a computer. He will repay the loan in equal monthly payments over 3 years, starting 1 month from now. He is charged interest at 12. 5% per year compounded monthly. How much is Donald’s monthly payment? N = 36 I% = 12. 5 PV = 1200 PMT = -40. 144 FV = 0 P/Y = 12 C/Y = 12 Therefore Donald’s monthly payment is $40. 14.

Sherri borrows $9500 to buy a car. She can repay her loan in 2 ways. The interest is compounded monthly. Option A: monthly payments for 3 years at 6. 9% per year Option B: monthly payments for 5 years at 8. 9% per year a) Determine the monthly payment under each option: b) Give a reason Sherri might choose each option. N = 36 I% = 6. 9 PV = 9500 PMT = -292. 90 FV = 0 P/Y = 12 C/Y = 12 Option 2: answer: $196. 74 Option A: pay less total interest Option B: monthly payments are smaller

What is an RRSP? What is an RESP? Why would you save using them?

Jane and Jim buy a house for $170 000 and put a 20% down payment on the house. How much is their mortgage for? . 20 X 170 000 = $34 000 down payment Mortgage: 170 000 – 34 000 = 136 000 Calculate their monthly payments if they have a mortgage rate of 5% compounded semi-annually for a 5 year term and it is amortized over 25 years. N = 25 X 12 = 300 I% = 5 PV = 136000 PMT = -790. 98 FV = 0 P/Y = 12 C/Y =2 Therefore: Jim and Jane’s regular monthly payment would be $790. 98