Business Math: Week 11

Question

8. Paul Lospennato wants to buy a house. Five years from now, he will need $90,000. Paul wants you to calculate how much he needs today to put in the bank (10% semi annually) to reach his goal in the future.

11. Lou Valdez is buying a truck. His monthly interest was $155 at 10 1/4% interest. What is Lou's principal balance after the beginning of November? Use 360 days. Do not round the denominator in your calculator.

12. Marcia Gadzera wants to retire in San Diego when she is 65 years old. Marcia is now 50 and believes she will need $90,000 to retire comfortably. To date, she has set no retirement money. If she gets interest of 10% compounded semiannually, how much must she invest today to meet her goal of $90,000?

Answer 1

8.is Use interest formula

A = P(1 + (r/n))^nt

P = principal

n = number of compounding per year

t = number of years

A = amount at the end

A =90000

r =0.10

n =2

t =5

90000 = P(1 + (0.10/2) )^(2*5)

90000 = P( 1.05)^10

90000 = P*1.628894627

P = 90000/ 1.628894627=55252.19282

so to insure , it get to 90000, you must round up

P = $55252.20

=== checking answer

A= 55252.20*(1 +(0.10/2) ) ^(5*2) = 90000.0117

11.is $18,146.48

$155/(.1025 × (30/360)) = $18,146.34.

12.is $20823.97

N = 30 

I/Y = 5

CPT PV = −2,0823.97

PMT = 0 

FV = 90,000 

PV = 90,000 ÷ 1.0530 = 20,823.97