Answer to Question #73171 in Economics for Johny

Question

1. Your spendthrift cousins wants to buy a fancy watch for $425. Instead, you suggest that she buy an inexpensive watch for $25 and save the difference of $400. Your cousin eventually agrees with your idea and invests $400 for 40years in an account earning 9% interest per year. How much will she accumulate in this account after 40 years have passed?

2. 4.Kris borrows money in her senior year to buy a new car. The car dealership allows her to defer payments for 12 months, and Kris makes 36 end-of-month payments thereafter. If the original note(loan) is for $24,000 and interest is ½% per month on the unpaid balance, how much will Kris’ payments be?

3. How much money should be deposited each year for 10 years if you wish to withdraw $3,000 each year for five years, beginning at the end of 15th year? Let i=8% per year.