1. You have no debt and $2,000 in your savings account. On your current budget, you figure that you can save an additional $2,000 each year. You want to put your money to work. Calculate the return on each of the investment options described below.
a. Continue putting your money into your savings account, which earns an annual interest rate of 3 percent. What will be the balance of your savings account at the end of 10 years, and how much interest will you have earned?

Savings Balance:

Interest Earned:

b. Put your savings and the extra $2,000 into a mutual fund that earns 8 percent annually. If you reinvest your profits each year (earning compound interest), how much will you have in the mutual fund at the end of 10 years, and how much interest will you have earned?

Total in Mutual Fund:

Interest Earned:

c. Leave half of your $2,000 in savings, and invest the other half in the stock market. Do the same each year, putting $1,000 in stocks and the other $1,000 in savings. You earn 3 percent on your savings account and 10 percent on your stock investments. How much will you have earned from your savings account after 10 years? How much will you have earned from your stock investments after 10 years? How much money will you have between your savings account and your stocks combined after 10 years?

Money Earned from Savings Account:

Money Earned from Stock Market:

Total Money:

2. Your family gives you $5,000 as a college graduation present. You are about to start paying off $50,000 in student loans at a 4 percent interest rate for a 15-year loan. You could use this money to pay some of your loans, but you could also invest it.

a. Calculate the monthly payments and total payment you will be making on your loan if you do not use the $5,000 to make an initial payment.

Monthly Payment:

Total Amount Paid:

b. Calculate the monthly payments and total payment you will be making on your loan if you do use the $5,000 to make an initial payment.

Monthly Payment:

Total Amount Paid:

c. List two ways you could invest the money, and describe the expected returns from each method over a 15-year period.

d. What would you do with the $5,000? Explain why your choice makes financial sense to you.

Question

11-01-2019
Mathematics

contestada

1. You have no debt and $2,000 in your savings account. On your current budget, you figure that you can save an additional $2,000 each year. You want to put your money to work. Calculate the return on each of the investment options described below.
a. Continue putting your money into your savings account, which earns an annual interest rate of 3 percent. What will be the balance of your savings account at the end of 10 years, and how much interest will you have earned?

Savings Balance:

Interest Earned:

b. Put your savings and the extra $2,000 into a mutual fund that earns 8 percent annually. If you reinvest your profits each year (earning compound interest), how much will you have in the mutual fund at the end of 10 years, and how much interest will you have earned?

Total in Mutual Fund:

Interest Earned:

c. Leave half of your $2,000 in savings, and invest the other half in the stock market. Do the same each year, putting $1,000 in stocks and the other $1,000 in savings. You earn 3 percent on your savings account and 10 percent on your stock investments. How much will you have earned from your savings account after 10 years? How much will you have earned from your stock investments after 10 years? How much money will you have between your savings account and your stocks combined after 10 years?

Money Earned from Savings Account:

Money Earned from Stock Market:

Total Money:

2. Your family gives you $5,000 as a college graduation present. You are about to start paying off $50,000 in student loans at a 4 percent interest rate for a 15-year loan. You could use this money to pay some of your loans, but you could also invest it.

a. Calculate the monthly payments and total payment you will be making on your loan if you do not use the $5,000 to make an initial payment.

Monthly Payment:

Total Amount Paid:

b. Calculate the monthly payments and total payment you will be making on your loan if you do use the $5,000 to make an initial payment.

Monthly Payment:

Total Amount Paid:

c. List two ways you could invest the money, and describe the expected returns from each method over a 15-year period.

d. What would you do with the $5,000? Explain why your choice makes financial sense to you.

Respuesta :

Otras preguntas

The main advantage of plutonium breeder reactors over conventional hot-water reactors is:___________ a. Reduction of the operation cost of the reactor b. Reduct

BY the time we started to walk home there was a cold damp stinging November wing blowing in our faces Read the sentence select two adjectives that should be fol

Which of the following policies helped to undermine Yuan's authority?

ASAP PLS! Brainliest points!

Angles of Elevation and Depression Acellus Find the distance from point B to point C. Enter as a decimal rounded to the nearest tenth. 58 6 mi B с BC = [?] mi E

Task 2 - Problema social In this activity, you will write a short article, in Spanish, about a social issue that’s close to your heart and exists either in a La

brainly and points if you want

Shortly before she was to start high school, Aaliyah's family moved to another state. On the first day of school, Aaliyah's mother catches Aaliyah sucking her t

Drag each tile to the correct location. Identify each sentence as a compound or complex sentence. We can go to the park, or we can go to the playground. I was e

What does it NOT mean for something to be open source? It’s available for anyone to use It’s free for all It’s available for anyone to modify Free to use

bayosanuade bayosanuade · Answer 1 · 2019-10-28T20:02:58+01:00

Answer: [tex]\\[/tex](a) Saving balance = $20,600

[tex]\\[/tex]Interest = $600

[tex]\\[/tex] (b) Total in Mutual fund = $26,503.34

[tex]\\[/tex] Interest earned = $3,903.34

[tex]\\[/tex](c) Money Earned from Savings Account= $11,330

[tex]\\[/tex] Money Earned from Stock Market:$12,100

[tex]\\[/tex] (2a) Monthly Payment = $7,503.93

[tex]\\[/tex]Total Amount Paid = $90,047.18

[tex]\\[/tex] (b) Monthly Payment =$6,753.53

[tex]\\[/tex] Total Amount Paid = $81,042.46

[tex]\\[/tex](c) Peer - peer lending and index fund

Step-by-step explanation:

[tex]\\[/tex]The Original money, which is the principal , in the savings account is $2,000

[tex]\\[/tex]Savings each year = $2,000

[tex]\\[/tex]Savings for 10 years = $2,000 x 10 = $20,000

[tex]\\[/tex]Annual Interest rate = 3%

[tex]\\[/tex]Interest for 10 years = PTR/100

[tex]\\[/tex]= 2000 x 10 x 3 / 100

[tex]\\[/tex] = 600

[tex]\\[/tex]Total savings after 10 years = saving + interest

[tex]\\[/tex]= $20,000 + $600

[tex]\\[/tex]= $20,600

[tex]\\[/tex]Therefore:

[tex]\\[/tex]Savings balance = $20,600

[tex]\\[/tex]Interest earned = $ 600

[tex]\\[/tex](b) The savings + the extra $2000 = $20,600 + $ 2,000

[tex]\\[/tex]= $22,600

[tex]\\[/tex]Interest rate = 8%

[tex]\\[/tex]Interest = 22,600 x 1 x 8 / 100

[tex]\\[/tex]= $1,808

[tex]\\[/tex]That means profit = $ 1,808

[tex]\\[/tex]Re – investing the profit, we will take the profit as the principal and then calculate the compounded interest for 10 years using the formula

[tex]\\[/tex]A = P[tex](1+r)^{t}[/tex]

[tex]\\[/tex] = 1,808 (1.08)10

[tex]\\[/tex] = $3,903.34

[tex]\\[/tex]Amount in the mutual fund at the end of ten years implies

[tex]\\[/tex]$22,600 + $3,903.34 = $26,503.34

[tex]\\[/tex]Total in Mutual fund = $26,503.34

[tex]\\[/tex]Interest earned = $3,903.34

[tex]\\[/tex](c) Since half of the $2,000 is left in savings, it means we have [tex]\\[/tex]$1,000 in savings

[tex]\\[/tex]Savings after 10 years = $1,000 + 10 x $1,000 = $ 11,000

[tex]\\[/tex]3% of savings = 0.03 x 11.000 = $330

[tex]\\[/tex]Total money in Savings = $11,000 + $330

[tex]\\[/tex] = $11,330

[tex]\\[/tex]Also for Stock

[tex]\\[/tex]Money in stock after 10 years = $1,000 + 10 x $1,000 = $11,000

[tex]\\[/tex]10% of stock = 0.1 x $11,000 = $1,100

[tex]\\[/tex]Total money in Stock = $11,000 + $1,100

[tex]\\[/tex] = $12,100

[tex]\\[/tex]Total money = money in savings + money in stock

[tex]\\[/tex]= $11,330 + $12,100

[tex]\\[/tex]= $23,430.00

[tex]\\[/tex](2) Amount given = $5,000

[tex]\\[/tex]Loan = $50,000

[tex]\\[/tex]Interest rate on loan = 4%

[tex]\\[/tex]Calculating the amount the loan will yield after 15 years using the formula

[tex]\\[/tex]A = P[tex](1+r)^{t}[/tex]

[tex]\\[/tex]A = 50,000 ( 1 + 0.04)15

[tex]\\[/tex]A = $90,047.18

[tex]\\[/tex]Therefore the compounded interest ( C.I) = $90,047.18 - $50,000

[tex]\\[/tex] = $40,047.18

[tex]\\[/tex](a) If you do not use the $5,000 , the monthly payment = $90,047.18 / 12

[tex]\\[/tex]= $7,503.93

[tex]\\[/tex]And the total payment = $90,047.18

[tex]\\[/tex](b) If , $5,00 is used as the initial payment then the remaining loan will be

[tex]\\[/tex] $50,000 - $5,000 = $45,000

[tex]\\[/tex]So , we will have to calculate the amount $45,000 will yield after 15 years using the same formula

[tex]\\[/tex]That is : A = 45,000 (1.04)15

[tex]\\[/tex] A =$ 81,042.46

[tex]\\[/tex]Therefore the C.I = $81,042.46 - $45,000

[tex]\\[/tex]= $36,042.46‬

[tex]\\[/tex]Monthly payment = $ 81,042.46/ 12

[tex]\\[/tex] = $6,753.53

[tex]\\[/tex]Total payment = $81,042.46

[tex]\\[/tex](c) Method of investing the money

[tex]\\[/tex](i) Peer to peer Lending. Giving helping hand one could earn [tex]\\[/tex]money as they pay back the loan with interest. If the interest is set to be 20%, for 15 years , 5000 will yield

[tex]\\[/tex]5000(1.2)15 = $77,035.10

[tex]\\[/tex](ii) Index fund : Index funds are a collection of stocks, so your investment is automatically diversified. Index fund like E-trade could be invested into. Using the stock calculator , it would yield $141,144

[tex]\\[/tex](d) I would rather invest the money in E- trade since I am sure it would bring a profit more than the amount of the loan will yield after 15 years , I will even have more money to hold at habd

-