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- Find the quarterly payment needed to accumulate $30,000 in 8 years, assuming an interest rate of 5.17%.
- If Trina wants to have $800,000 in her retirement account in 40 years, how much should she deposit into the account
each week, assuming she can earn 9.51%? - Carlos wants to start law school in 3 years, and fi gures that he needs to save up $12,500 between now and then to
help pay for his tuition and living expenses. How much should he set aside at the beginning of each month to reach this
goal, assuming his savings earn 4.05%?
B. Sinking Funds with Loans- A company borrowed $40,000 for 3 years at 6% compounded daily. It will not make any payments on this loan prior to
maturity. Find the quarterly sinking fund payment needed to accumulate this maturity value, assuming a 5% rate. - Jason’s uncle loaned him $37,500 to help him start a landscaping business. They agreed that Jason would pay off the
entire loan plus 3½% annually compounded interest in 3 years, and that in the meantime he would make monthly deposits
into a bank account to make sure that he has the amount needed when the loan comes due. The bank account will pay
3%. (a) Find the total amount Jason will need to repay the loan. (b) How much should each of his monthly deposits be?
C. Sinking Funds and Retirement Planning- Astrid fi gures that in the next 20 years she needs to build up a balance of $500,000 in a retirement account she has
just opened. Deposits into this account will be made by deductions from her biweekly paychecks. If her account can
earn 8.4%, how much should each deposit be? - Redit hopes to build up an account value of $1,600,000 over the next 40 years in an account that he thinks will earn
11.27%. Under these assumptions, how much should he invest each month?
D. Grab Bag- The business manager of the Rock City Central School District commented at a school board meeting that in 7 years
the district will have a loan coming due that will require $996,423 to pay. He recommended that the district should
prepare for this payment by setting funds aside each year in an account paying 3.09% to build up the needed balance.
According to his plan, how much should each payment be? - I just borrowed $30,000, which I will have to pay off in 5 years, together with interest. Interest accumulates at an effective
rate of 10.33%. How much should I deposit to a sinking fund each month to be able to pay off this loan, assuming that
my account pays 3.68% compounded monthly? - Paul has nothing in his savings account, but he wants to have $8,000 in it 1 year from now. If the account pays 2½%,
how much should he deposit each week? - How much would you need to deposit each week into an account earning 8.5% in order to have $1,000,000 in 40 years?
Exercises 4.3 167