Over the last twelve years, you have been making monthly payments on a 30 year, $80,000 home loan at 8% interest compounded monthly. You have just won $100,000 while on a riverboat gambling cruise in Dubuque, Iowa.
a. Draw the Cash Flow Diagram (neatly – with a straight edge; and label all values, and time increments). Or, you may draw this using EXCEL.
b. If $20,000 will go to pay income taxes on the winnings, will you have enough left over to pay off the loan on your home?
HINT: Calculations maybe the simplest if you use the formulas factor OR use EXCEL to calculate the Uniform Series and the Present Worth values.