E. Grab Bag- Bob borrowed $174,500 on a 30-year mortgage loan. His monthly payments are $1,349.95. What interest rate is he
paying on this loan? - How long will it take to accumulate $20,000 in a savings account with $125 monthly payments if the account earns 5%?
- Elyjah is putting $5,000 each year into an investment account earning 8.5%. How long will it take for his account
balance to reach $500,000? What rate would he need to earn on his investments to reach this goal in 20 years? - A $20,000 loan has quarterly payments of $1,250. The term is 7 years. What is the interest rate?
- According to a fi nancial commentator, anyone who puts $2,500 a year into an aggressive investment fund “can be a
millionaire in just 25 years!” What interest rate is this projection assuming?
F. Additional Exercise- Malik just borrowed $20,000 with a personal loan. The interest rate will be 5.99% for the fi rst year, 7.99% for the
second year, and 9.99% for the remainder of the loan’s term. Mike wants to pay the same amount each month. If the
term of the loan is 10 years, what should his monthly payment be?
Exercises 5.4 243Copyright © 2008, The McGraw-Hill Companies, Inc.