FUTUREDREAMS

Desirae Pitones-Apodaca
Finite Math
Per.4
1/25/2017

DREAM JOB

-Labor and Delivery

Nurse

-Labor and Delivery Nurses help bring

people into the world every day. They
care for women during labor and
childbirth, monitoring the baby and
the mother, coaching mothers and
assisting doctors.
-Annual Salary:$67,490
-Education Required: Associate of
Science in Nursing or a Bachelor of
Science in Nursing degree, then, pass
the National Council Licensure
Examination, or NCLEX

DREAM CAR
-Make:Chevrolet
-Model: Suburban
-Year:2016
-Cost:$52,935

DREAM HOME

-StudioApartment
-Los Angeles, CA
-2 Bedrooms
-1 Bathroom
-762sq feet
Cost:$1,875

5.2 ANNUITIES

-DreamJob Selected forproject:Labor and Delivery Nurse

-Annualsalaryof dream job for project: $67,490
-Amount to save for retirementeach year:$1,000
-Suppose you havethe 28%marginaltax bracket.

A.
Savings Account
=1000(1+.0576)201
0.0576
=35850.49

Annuity
(Insurance
Company)
=1000(1+.0576)201
0.08
=45761.96

5.2 ANNUITIES
B
Savings Account
I=35850.49-(20)
(1000)
35850.49-20,000
=15850.49

C.

Annuity
(Insurance
Company)
I=45761.96-(20)
(1000)
45761.96-20,000
=25761.96
(1-28)(2576.96)
(.72)(25761.96)
=18548.61

5.3
AMORTIZATION&SINKINGF
1.Make: Chevrolet Model: Suburban Cost:$52,935
UNDS
1A. Amortize the loanby the end of3years.
P=52,935 ,i=r/m=8% ,and n=mt=3
We plugit into:
R=

Pi
1-(1+i)-n

(52,935)(0.08)

R=

1-(1+0.08)-3

4,234.80
=

0.206167759

Thus, the required yearlyinstallment(payment) would

be:$20,540.55

5.3
AMORTIZATION&SINKINGF
Tableto amortize the loan at the end of 3 years:
UNDS
(CONTINUED)
End of
Period

Interest
Charged

Repayment
Made

Payment
Toward
Principal

Outstanding
Principal
$52,935

$4,234.80

$20,540.55

$16,305.75

$36,629.25

$2,930.34

$20,540.55

$17,610.21

$19,019.04

$1,521.52

$20,540.55

$19,019.03

$.01

5.3
AMORTIZATION&SINKINGF
1B.Amortizethe loanby the endof 5 years.
UNDS
(CONTINUED)
P=52,935 ,i=r/m=8% ,and n=mt=5
We plug it into
R=

Pi
1-(1+i)-n

R=

(52,935)(0.08)
1-(1+0.08)-5

4,234.80
0.319416803

Thus,the required yearly installment (payment) would be:

$13,257.91

5.3
AMORTIZATION&SINKINGF
Table
to amortizethe
loan at the end of
5 years:
UNDS
(CONTINUED)
End of
Period

InterestCh
arged

Repayment
Made

Payment
Toward
Principal

Outstandin
g Principal
$52,935

$4,234.80

$13,257.91

$9,023.11

$43,911.89

$3,512.95

$13,257.91

$9,744.96

$34,166.93

$2,733.35

$13,257.91

$10,524.56

$23,642.37

$1,891.38

$13,257.91

$11,366.53

$12,275.84

$982.06

$13,257.91

$12,275.88

$.04

5.3
AMORTIZATION&SINKINGF
1C.Amortizethe loanby theof 7 years
UNDS
(CONTINUED)
P=52,935 ,i=r/m=8% ,and n=mt=7
We plug it into
R=

Pi
1-(1+i)-n

R=(52,935)(0.08) =
1-(1+0.08)-7

4,234.80
0.4165096047

Thus,the required yearly installment (payment) would

be:$10,167.35

5.3
AMORTIZATION&SINKINGF
Table
to amortizethe
loan at the end of7 years:
UNDS
(CONTINUED)
End of
Period

Interest
Charged

Repayment
Made

Payment
Toward
Principal

Outstanding
Principal
$52,935

$4,234.80

$10,167.35

$5,932.55

$47,002.45

$3,760.19

$10,167.35

$6,407.16

$40,595.29

$3,247.62

$10,167.35

$6,919.73

$33,675.56

$2,694.04

$10,167.35

$7,473.31

$26,202.25

$2,096.18

$10,167.35

$8,071.17

$18,131.08

$1,450.48

$10,167.35

$8,716.87

$9,414.21

$753.13

$10,167.35

$9,414.22

$.01

5.3
AMORTIZATION&SINKINGF
UNDS

2.Calculatehow muchyou will need to paythe loan if the interest rateis at 8%per yearis
charged on the unpaidbalance at theend of each month. Determinethe size ofeach
installment so that the loan isamortizedat theend of 5 years.Verifythe result by displaying
the amortization schedule.Solution:
Amortize the loanby the end of5 years.(m=12 sincepaying monthly)
P=52,935 ,i=r/m=0.08
,and n=mt=5(12)
12

R=

Pi

1-(1+i)-n

(52,935)
R= (0.0067)
1-(1+0.0067)60

=1074.345

Thus, the required monthlyinstallment (payment) would be$1074.34

If we wereto makean amortizationschedule table, thiswould make foran
extensiveamortization schedulethat would show all 60 payments.

5.3
AMORTIZATION&SINKINGF
UNDS

Dream House:Studio Apartment

Location: LosAngeles, CA

Bedrooms:2 Bathrooms:1 Sq. Ft:762Cost:$1,875

3. Supposeyouborrow from the bankthe amountof the home costof $1,875. The bankcharges
interest at a rateof 5.4% peryear on the unpaidbalance,with interestcomputations made at theend of
each month. Youagree to repaythe loan in equal monthlyinstallments over 30 years. How much should
each payment beif the loan is to beamortized at the endof the team?
Solution:

R=
P= 1,875i=r/m=8% ,and n=30(12)
R=

Pi
1-(1+i)-n
(1875)(0.053)
1-(1+0.053)360

116.80

Thus, the requiredmonthly installment(payment) would be$116.80

5.3
AMORTIZATION&SINKINGF
UNDS

4. For this calculation, assume you onlywant to use 40%of your monthlyincometopay
foramonthly housepayment.Calculate:

$116.80

$67,490

(0.04)

12

224.96
=
Letsplug in the information we have:
0.05
P=224.96 ,i=r/m=,
and n=mt=30(12)
12
4
1-(1+i)-n
P=R
i

P=
Thus, you can borrow at
most$40,061.01

1-(1+0.0044)360
0.004
5

40,061.01

5.3
AMORTIZATION&SINKINGF
UNDS
Therefore I would seek ahouse that costat most the amount I can
borrowfrom the bank.Yes,I would be able to afford to buy my
house, my house costs$1,875therefore, I can
borrow$40,061.01from the bank.