Please help with these question and show steps. 1. you own a mortgage of $1000 a

Question

Please help with these question and show steps.

1. you own a mortgage of $1000 a month that will last 15 years. How much would a bank pay you for the mortgage assuming the bank wants a 4% annual return?

2. You deposit $250 a month in a savings account drawing 6% annual interest (monthly compound). How much will you have after 5 years?

3. A car costs $21,999.99. You get a loan for 5 years at 6% annual interest. What does the truth in lending statement say you will actually pay out for the car?

Show steps please.

Explanation / Answer

1. here payment PMT =$1000, n=15*12 = 180 months , r=4/12 % = 0.333%

so present value = 1000/(1+0.333%)+1000/(1+0.333%)+---+1000/(1+0.333%)^180

=$135,192.15

hence amount would a bank you for the mortgage assuming the bank wants a 4% annual return = $135,192.15

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