document.write( "<A HREF=/cgi-bin/jump-to-question.mpl?question=85625>Question 85625</A>: <I><SPAN STYLE=\"word-break: break-all;\"> Problem #1\r<BR>\n" );
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document.write( "Student Loans Student borrowers now have more options to<BR>\n" );
document.write( "choose from when selecting repayment plans.* The standard<BR>\n" );
document.write( "plan repays the loan in 10 years with equal monthly payments.<BR>\n" );
document.write( "The extended plan allows from 12 to 30 years to repay the loan.<BR>\n" );
document.write( "A student borrows $35,000 at 7.43% compounded monthly.<BR>\n" );
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document.write( "Find the monthly payment and total interest paid under the<BR>\n" );
document.write( "standard plan.\r<BR>\n" );
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document.write( "Problem #2\r<BR>\n" );
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document.write( "Inheritance Sandi Goldstein has inherited $25,000 from<BR>\n" );
document.write( "her grandfather’s estate. She deposits the money in an<BR>\n" );
document.write( "account offering 6% interest compounded annually. She<BR>\n" );
document.write( "wants to make equal annual withdrawals from the account<BR>\n" );
document.write( "so that the money (principal and interest) lasts exactly<BR>\n" );
document.write( "8 years.<BR>\n" );
document.write( "a. Find the amount of each withdrawal.<BR>\n" );
document.write( "b. Find the amount of each withdrawal if the money must<BR>\n" );
document.write( "last 12 years. </SPAN>\n" );
document.write( "</I><HR><TABLE width=100%><TR><TD><B><A HREF=http://www.algebra.com/>Algebra.Com's</A> Answer #61849 by </B><A HREF=/tutors/aboutme.mpl?userid=stanbon><B>stanbon(75887)</B></A><img src=\"/images/stars/stars-13.gif\" alt=\"\" >&nbsp;<A HREF=/tutors/aboutme.mpl?userid=stanbon><IMG SRC=http://www.algebra.com/images/aboutme-small.gif BORDER=0 alt=\"About Me\" VALIGN=MIDDLE></A>&nbsp;<IMG SRC=http://www.algebra.com/images/nopicture.jpg><BR>You can <A HREF=\"/cgi-bin/embed-solution.mpl?show=1&solution=61849\">put this solution on YOUR website!</A><BR><SPAN STYLE=\"word-break: break-all;\"> The standard plan repays the loan in 10 years with equal monthly payments.<BR>\n" );
document.write( "A student borrows $35,000 at 7.43% compounded monthly.\r<BR>\n" );
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document.write( "Find the monthly payment and total interest paid under the<BR>\n" );
document.write( "standard plan.<BR>\n" );
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document.write( "Formula: <BR>\n" );
document.write( "Loan Balance = (original amount)(1+r)^n-[(payment amt)/i][(1+i)^n-1]<BR>\n" );
document.write( "i is the interest for each payment period; n is # of payments<BR>\n" );
document.write( "You want the loan balance to be zero.<BR>\n" );
document.write( "0 = 35000(1+.0743/12)^(10*12) - [P/(0.0743/12)][(1+(0.0743/12)^120 -1]<BR>\n" );
document.write( "0 = 35000(1.006191667)^120 - [P/0.006191667][1.006191667^120 - 1]<BR>\n" );
document.write( "0 = 35000 - [P/0.006191667][1.0974225777}<BR>\n" );
document.write( "0=73409.79 -P*177.24<BR>\n" );
document.write( "P = $414.18 (monthly payment made for 120 months<BR>\n" );
document.write( "Total Interest = 120*414.18-35000= $14,701.44 <BR>\n" );
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document.write( "Inheritance Sandi Goldstein has inherited $25,000 from<BR>\n" );
document.write( "her grandfather’s estate. She deposits the money in an<BR>\n" );
document.write( "account offering 6% interest compounded annually. She<BR>\n" );
document.write( "wants to make equal annual withdrawals from the account<BR>\n" );
document.write( "so that the money (principal and interest) lasts exactly<BR>\n" );
document.write( "8 years.<BR>\n" );
document.write( "a. Find the amount of each withdrawal.<BR>\n" );
document.write( "Same formula as above. By the way you can find formulas using Google<BR>\n" );
document.write( "and searching on \"investment formulas\".<BR>\n" );
document.write( "0 = 25000(1.06)^8-[P/0.06][(1.06)^8 - 1]<BR>\n" );
document.write( "Solve for P.<BR>\n" );
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document.write( "b. Find the amount of each withdrawal if the money must<BR>\n" );
document.write( "last 12 years.<BR>\n" );
document.write( "Let n=12 and solve for P.<BR>\n" );
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document.write( "Cheers,<BR>\n" );
document.write( "Stan H.<BR>\n" );
document.write( " </SPAN>\n" );
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