Problem Set 2 Part 1These problems focus on saving annuities. The related text information is chapter 7 section 7-4. Examples 8,9, 10 will be helpful.Be sure to use the annuity formula.
Only do the one question that corresponds to your assigned number. Do not answer all of the questions.
Be sure that you show all of your work to reach your answer. Each step must be on a separate line. Your method to reach your answer must be clear and include explanations
15-1)
As part of your retirement planning, you purchase an annuity that pays 3.5% annual interest compounded quarterly
A). If you make quarterly payments of $ 600 how much will you have saved in 5 years?
B) Instead, if you make quarterly payments of $300, how much will you have saved in 10 years?
15-2)
You plan to purchase a house for $410,000 and you will make a 20% down payment. You are evaluating two mortgages a 30-year fixed mortgage at 2.87% and a 15-year fixed mortgage at 2.25%. Your goal is to have a monthly payment that fits within your budget.
A) Which mortgage will give you the lowest monthly payment? What will that payment be? How much less will this be than the other monthly mortgage payment?
B) Assuming you take the full term of the mortgage, which mortgage will result in you paying the most interest? What will that interest be?
These are two sets of questions with four answers in total. I will add chapter 7 in the chat.
