Question: Part A: Bill has decided to begin investing for retirement. He is going to put his tax raturn of $4,174 into the account today and then set up monthly contributions from his paycheck in the amount of $427. The money will go into an account that earns 4.5 percent annual interest (compounded monthly). How much will he have in the account after 33 years?
Part B: Fred has $55,000 in student loans, which carry an annual interest rate of 9.2 percent. He wants to pay them off early and decides to pay $1,000 per month until the loans are paid off. How many months will it take to pay off these loans? (Show your answer to two decimals, e.g., 12.34; fractional months are okay)
Part C: After he was injured in a car accident, the insurance company promised to pay Fred $10,000 per month for 3 years. Assuming Fred's opportunity cost is 9.3 percent annually, what is the present value of Fred's settlement?
Part D: You are purchasing a car with no money down and have borrowed $20,000 at an annual interest rate of 9 percent. The terms of the loan require you to pay off the loan by making monthly payments over the next 6 years. What is the amount of each payment?