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  1. Answer and Explanation:

    The computation is shown below:

    a. For computing the number of money required at the end of four years first we need to find out the present value i.e to be shown in the attachment

    Given that,  

    Future value = $0

    Rate of interest = 7%

    NPER = 4 years

    PMT = $10,000

    The formula is shown below:

    = PV(Rate;NPER;PMT;FV;type)

    So, after applying this, the present value is $33,872.11

    Now the net nest egg is

    = $120,000 - $33,000 - $33,872.11

    = $53,127.89

    Now the future value is

    = Present value × (1 + interest rate)^number of years

    = $53,127.89 × (1 + 0.07)^4

    = $69,639.83

    b. Now to find out the number of years required to stay in school we need to use the NPER formula i.e be to shown in the attachment

    Given that,  

    Present value = $69,639.83

    Future value = $0

    Rate of interest = 7%

    PMT = $24,060

    The formula is shown below:

    = NPER(Rate;PMT;-PV;FV;type)

    The present value come in negative

    So, after applying this, the answer would be 3.35 years

    [tex]Your parents have accumulated a $120,000 nest egg. They have been planning to use this money to pay[/tex]
    [tex]Your parents have accumulated a $120,000 nest egg. They have been planning to use this money to pay[/tex]

  2. Paying extra on your mortgage means that you make additional payments to your principal loan balance beyond your regular payments. For example, if you pay $1,300 per month normally, you may pay an extra $200 to the principal for a total payment of $1,500. Or if you get a bit of money, say a $5,000 tax refund, you could apply it to your principal loan balance. The faster you pay off your mortgage, the less you will pay in interest, reducing your overall loan cost. However, this option should be considered in the context of your larger financial situation.How much will you save by making extra payments?The amount you can save by making extra mortgage payments is one of the first things you need to figure out as that number will enable you to compare it to other options. Let’s take a look at how much you could save on interest over the life of a 30-year, $200,000 loan with a 3.5% interest rate if you paid $50, $100 and $250 extra each month. Just paying an extra $50 per month will shave 2 years and 7 months off the loan and will save you over $12,000 in the long run. If you can up your payments by $250, the savings increase to over $40,000 while the loan term gets cut down by almost a third.The savings can be substantial. Use a mortgage calculator to figure out your estimated savings. Then, compare that to the savings or returns you can get by investing the same money elsewhere.Ways to prepay your mortgagePay more every monthThe first option is to analyze your budget and see if you can afford to increase the amount you pay on your mortgage each month. Even if you can only commit to $25 or $50, it can save you thousands over the course of the loan.Make an extra payment each year Another option is to make one extra payment each year that is equal to your normal payment amount. This can be a good option if you get a bonus or tax refund each year.Make a lump-sum paymentSometimes situations come about which leave people with a lump sum of money, like receiving an inheritance. While exciting, it can also be stressful because you want to use the money wisely. Using lump sums to pay down your mortgage helps to reduce your interest and increase equity faster, which is a helpful investment. It can also ensure that the money is invested rather than spent.Mix it up You can also use a combination of these approaches, such as paying a little bit more each month and then making a larger one-time payment when you can.

    The right payment strategy for you will depend on your financial situation. For example, if your budget is tight and you can’t commit to paying more every month but have certain months when your income is higher, you can commit to making an extra payment during those months. Alternatively, if you don’t receive any income boosts throughout the year but have a little bit of disposable income each month, the monthly payment option will be a better fit.When not to pay extraPaying extra on your mortgage can be helpful but it isn’t always the best use of your money.“Whether you should pay extra on your mortgage or not depends on the rest of your financial picture. If you have credit card debt, an expensive car loan, or other high-interest debt, you’ll want to pay that down before making extra payments on your mortgage,” Matthew McEwan, VP of real estate development and property management firm Medallion Capital Group, said.“Additionally, if you are a savvy investor who can tolerate some risk, you may be able to achieve a higher rate of return by investing that money instead,” McEwan said.What to do before paying off your loan earlyBefore you pay off your mortgage early, there are a few things you should do. For one thing, you’ll want to meet all of your regular necessary expenses (rent, food, clothing, etc.). Next, ensure you pay off any debts you have with interest rates that are higher than the interest rate on your mortgage. For example, if you have a $5,000 balance on a credit card with an 18% APR and your mortgage has a 4% APR, you’ll save more by paying down the credit card first.It’s also recommended to make sure that you have an emergency savings account that is equal to at least three months of pay, and preferably six. Moreover, confirm that you and your dependents are enrolled in the insurance policies you need to protect yourselves in the future. This often includes health, property, auto, disability and life policies.

    If you have an employer offer to match your retirement savings up to a certain percentage, max out the company contributions. The earlier you invest in retirement, the better.

  3. future value = $18097.80

    Step-by-step explanation:

    given data

    invest = $9,200

    time = 10 years

    rate = 7 percentage

    to find out

    Future  value


    we get here future value

    future value = invested × [tex](1+r)^{t}[/tex]    ...................1

    put her value we get

    future value = $9200 × [tex](1+0.07)^{10}[/tex]

    future value = $9200 × 1.96715

    future value = $18097.80

  4. [tex]\large\boxed{\large\boxed{\$ 167,404.57}}}[/tex]


    1. Present value of the payments of the first 10 years at the interest rate of 11% compounded monthly.

    Formula to calculate the present value, PV, of an annuity:



    C = monthly payment = $1,450r = monthly intererst rate = 11% / 12 = 0.11/12t = number of moths = 10 × 12 = 120

    Substitute and compute

                [tex]PV=C[\frac{1}{r}-\frac{1}{r(1+r)^t}]\\\\PV=\$ 1,450[\frac{1}{(0.11/12)}-\frac{1}{((0.11/12)(1+0.11/12)^{120}}][/tex]

                [tex]PV=\$ 105,263.15[/tex]

    2. Present value of the payments of the second first 10 years at the interest rate of 7% compounded montly

    To calculate this, you must calculate the present value of an annuality for 20 years and subtract the value of an annuity for 10 years, both with the interest rate of 7%.

    a) Annuity for 20 years

              [tex]PV=C[\frac{1}{r}-\frac{1}{r(1+r)^t}]\\\\PV=\$ 1,450[\frac{1}{(0.07/12)}-\frac{1}{((0.07/12)(1+0.07/12)^{240}}][/tex]

             [tex]PV=\$ 187,024.63[/tex]

    b) Annuity for 10 years

            [tex]PV=C[\frac{1}{r}-\frac{1}{r(1+r)^t}]\\\\PV=\$ 1,450[\frac{1}{(0.07/12)}-\frac{1}{((0.07/12)(1+0.07/12)^{120}}][/tex]

            [tex]PV=\$ 124,883.21[/tex]

    c) Difference

          [tex]PV=\$ 187,024.63-\$ 124,883.21=\$ 62,141.42[/tex]

    3. Total present value

    Total present value = $105,263.15 +  $62,141.42 Total present value = $167,404.57 ← answer

  5. Notes receivable:

    Dr Notes  receivable  $50,000

    Cr Cash                                      $50,000

    December Year 1:

    Dr interest receivable   $1,750

    Cr Interest revenue                   $1750

    June 1 Year 2:

    Dr interest receivable   $1,750

    Cr Interest revenue                   $1750

    The collection of cash from Small co:

    Dr cash ($50,000+$1750+$1750)              $53,500

    Cr Interest receivable($1750+$1750)                       $3,500

    Cr Notes receivable                                                   $50,000


    Upon the lending of $50,000 to Small Co,the cash account is credited with $50,000 since it is an outflow of cash and the notes receivable account debited with the same amount.

    However,at year end year 1, interest is due on the notes receivable,which is computed thus:

    interest receivable December Year 1=$50,000*7%*6/12=$1,750

    The interest due on 31st December year 1 would be debited to interest receivable and credited interest revenue.

    Interest due on 1 june year 2=$50,000*7%*6/12=$1,750

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