Pam decides to have a small building constructed in her backyard and hires a contractor to do this for her. The cost of the project will be $24,000. Since this is a substantial amount, Pam and the contractor agree that she will pay the contractor monthly over the course of 3 years and that the contractor will charge interest of 4% APR. Pam pays exactly the monthly payment she is supposed to each month. For her very last payment, the contractor makes a mistake and sends her a bill for half of what it should be. A friend tells Pam that she knows a contractor who would have completed the job for much less than $24,000. (a) Find Pam's monthly payment. (b) Find the amount of the last bill the contractor sent. (c) Should Pam pay the bill as it was sent or pay the full amount as she had been over the past three years?

Pam decides to have a small building constructed in her backyard and hires a contractor to do this for her. The cost of the project will be $24,000. Since this is a substantial amount, Pam and the contractor agree that she will pay the contractor monthly over the course of 3 years and that the contractor will charge interest of 4% APR. Pam pays exactly the monthly payment she is supposed to each month. For her very last payment, the contractor makes a mistake and sends her a bill for half of what it should be. A friend tells Pam that she knows a contractor who would have completed the job for much less than $24,000. (a) Find Pam's monthly payment. (b) Find the amount of the last bill the contractor sent. (c) Should Pam pay the bill as it was sent or pay the full amount as she had been over the past three years?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter14: Planning For Retirement

Section: Chapter Questions

Problem 8FPE

See similar textbooks

Similar questions

(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows in the popup window: LOADING... . If Nicki could earn 11 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? a. What rate of return could Nicki earn on her money if she place it in annuity A with $7,000 payment per year and 10 years duration? nothing% (Round to two decimal places.) Help Me Solve ThisView an Example Get More Help Clear All Check Answer Data Table ANNUITY INITIAL PAYMENT INTO ANNUITY (AT t = 0) AMOUNT OF MONEY RECEIVED PER YEAR DURATION OF ANNUITY (YEARS) A $40,000…
(Solving for r with annuities) Nicki Johnson, a sophomore mechanical engineering student, receives a call from an insurance agent, who believes that Nicki is an older woman ready to retire from teaching. He talks to her about several annuities that she could buy that would guarantee her an annual fixed income. The annuities are as follows If Nicki could earn 11 percent on her money by placing it in a savings account, should she place it instead in any of the annuities? Which ones, if any? Why? a. What rate of return could Nicki earn on her money if she place it in annuity A with $6500 payment per year and 16 years duration?
2. Annuities - Johan, a sophomore management student, receives a call from an insurance agent who believed that Johan is an older man ready to retire from teaching. He talks to him about several annuities that she would buy that would guarantee her an annual fixed income. The annuities are as follows: Initial Payment into Annuity (at t = 0) Amount of Money Received per Year Duration of Annuity (Years) Annuity 12 $8,500 A $50,000 25 $7,000 В $60,000 20 $8,000 $70,000 If Johan could earn 11 percent on his money by placing it in a savings account, should he place it instead in any of the annuities? Which ones, if any? Why?
Cassidy wants $7,000 saved in 4 years to make a down payment on a house. How much money should she invest now at 6.6% compounded annually in order to meet her goal? Question Help: Video Submit Question
Read and analyze the situation below then answers the question given. Your mom asked your opinion if she will be joining the cooperative in her office. She wants to know the amount of money she will be receiving after 6 months and wanted to buy something in December. The cooperative wants her to contribute P1,000 per month beginning in June 2020 which will earn 3% compounded monthly. How much will be the future value of your mom's contribution at the end of December 2020? Tasks: You need to prepare a report showing a cash flow diagram on the total amount of money your mother will earn at the end of December. At the end of your report, write a conclusion stating your opinion to help your mom to decide.
1. Car loan Planning to give his son a car as a gift when he graduated from college 2 years from now, Adam decided to set aside a fund to enable him to pay the expected monthly amortization of P 21,500.00 every month for 3 years. If a bank offers to pay an interest of 7.5% compounding monthly, how much should be set aside in order to achieve his plan? Sketch a time diagram or timeline for this problem
Answer the Situation below correctly show your complete solution.I already provided the answer I just need the SOLUTION.( Annuities ) Situation: My cousin , Hershey , is newlywed public school teacher who plans for the education of her future children. Initially , at the beginning of each month , 10 000.00 Php was deposited for 8 years in a bank in Orani. At the end of the month , the investment collects 9 % of annual interest and is compounded monthly. After the last deposit , how much is in the account ? Answer: After the last deposit, Hershey's account has 1 398 561.64 Php.
B. Study the following situation then answer the questions that follow: Mr. and Mrs. Cruz are planning to have their own home but have limited budget. They went to a home developer for some advice as to how the down payment will be produced for their chosen house and lot. This is the advice of the developer. To raise the amount of the down payment of the house and lot at the end of 5 years, you will invest P 23 000 at the end of each year for five years in an account that pays 8-% compounded annually. To find the down payment needed, give the values of the following: R = į(1) = m = t = j=, The situation above requires you to find amount (future value at the end of the term) F:
How do I solve this problem: Suze Orman wants to pay $1500 semiannually to her granddaughter for 10 years for helping her around the house. If Suze can invest money at 6% compounded quarterly, how much must she invest today to meet this goal?
3. Three years from now, Barbara Waters will purchase a laptop computer that will cost $2,250. Assume that Barbara can earn 6.25% (compounded monthly) on her money. How much should she set aside today for the purchase? Give typing answer with explanation and conclusion
Listen The Chan family would like to establish a bursary at Camosun College. The bursary will pay $2,000 to a deserving finance student each year. Assuming that the payments will never end and that the funds can earn j1=3.5%, how much will it take to establish the bursary? Assume that the payments are at the end of each year. Your Answer:
7. You plan to save every year and accumulate $150,000 in 6 years to make the down payment for your house. To achieve your financial goal, you plan to make a deposit of $20,000 per year into a bank account paying 6% annual interest. The first deposit will be made a year from today. a. Draw a timeline to visualize the problem. b. Can you achieve your financial goal? (Show your work to answer this question) c. If not, what is the minimum deposit you need to make per year in order to achive your goal? 8. You are pursuing a Bachelor's in Finance at a business school, and you will need $20,000 per year for the next 4 years to cover your college expenses. That is, you plan to withdraw $20,000 at the end each of the next 4 years, starting one year from today. To support your college education, your parents decide to make a deposit today into a bank account paying an 8% annual interest. This deposit should be sufficient to cover the four $20,000 withdrawals you will make over the next 4 years.…