178 Chapter 4 Annuities
INTEREST RATE
Years 7.0% 7.5% 8.0% 8.5% 9.0%
15 111.255958 107.873427 104.640592 101.549693 98.5934088
30 150.307568 143.017627 136.283494 130.053643 124.281866- How much could someone afford to borrow on a 30-year loan with an 8.5% interest rate, assuming a $950 monthly
payment? - A client says that he can afford a monthly payment of $1,200. On the basis of his credit, Jeff thinks he would qualify for
a 7.5% rate. How much could this client borrow with a 15-year loan? A 30-year loan? - What would the monthly payment be for a $120,000 loan for 30 years at 9.0%?
- Jeff took a couple out to look at a house on the market for $187,500. This couple could afford a $7,500 down
payment, so they would need to borrow $180,000 to buy the house. Assuming that they would qualify for the loan at
an 8% rate, what would their monthly payment be for a 30-year loan?
For another example of how tables like these are often used, see the Additional Exercises 37 to 39.
C. Finding Present Value Annuity Factors
Questions 6 and 7 deal with fi nding present value annuity factors, using Formula 4.4.3.
- If n 120 and i 0.00475,
a. Find s _n (^) | (^) i.
b. Find a _n (^) | (^) i.
- If n 96 and i 0.076/12,
a. Find s _n (^) | (^) i.
b. Find a _n (^) | (^) i.
Instructions for Exercises 8 through 12: Multiple different ways for calculating present value annuity factors have been
presented in this chapter. If your instructor has told you that one of these methods is the one you should use, then fi nd the
factor in that way. If you are allowed your choice of methods, try working these problems with each method to see which one
you like best.
8. Find a _n (^) | (^) i if n 60 and i 0.005.
9. Find a _n (^) | (^) i if n 15 and i 0.02.
10. Find a _n (^) | (^) i if n 12 and i 0.035.
11. Find a 120 ___ (^) | (^) 0.027.