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\begin{document}

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\noindent
\noindent
\parbox{2in}{\bf Math 1030} 
\hfill {\Large \bf Workshop \#2} \hfill
\parbox{2in}{\bf \hfill Due: July $14^{\mathrm{th}}$, 2015}

\vspace{0.35in}

\noindent {\large\bf Name:} \underline{\hskip 3.0 truein} 


\vspace{0.2in}


\noindent {\bf\large 1.} Little Jimmy is 10 years old. His parents have decided to put \$100 a month into a mutual fund earning 11\% compounded monthly. When Jimmy is 18 his parents plan to move this money into a much more conservative investment earning 3\% compounded {\bf quarterly}. How much will Jimmy be able to withdraw each quarter over his 4 years of college if his first withdrawal is made immediately (use the {\bf beginning} of each quarter for withdrawals).

\vspace{0.1in}

Balance when Jimmy is 18:  \underline{\hspace*{1.5in}}. \hfill  Quarterly withdrawals: \underline{\hspace*{1.5in}}.

  \vspace{0.1in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\noindent {\bf\large 2.} Laura wants to take out a 3 year long personal loan for some new furniture. After looking at her finances, she found that she can only afford to make \$350 loan payments each month. 

\begin{enumerate}[(a)]
\item Suppose Laura's bank will give her a 6.25\% rate (compounded monthly). How much can she afford to borrow?

  \vspace{0.25in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\item An online banking site has offered to loan Laura \$10,000 if she will pay \$350 a month for 3 years. What rate are they charging? [Your answer should be of the form: XXX.XXX\%]

  \vspace{0.25in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\end{enumerate}

\noindent {\bf\large 3.} George wants to buy a new car which costs \$40,000. The dealer offers him 2 options: (1) Pay cash and get \$5,000 cash back OR (2) Finance the car at 1.5\% for 5 years. If George takes option \#1, he plans to borrow the money from a bank at 8\% compounded monthly (for 5 years). 

\begin{enumerate}[(a)]

\item Which option is a better deal for George?   \underline{\hspace*{1.5in}}

  \vspace{0.1in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\item If George takes option (2), what rate (compounded monthly) is he {\it really} being charged? [Your answer should be of the form: XXX.XXX\%]

  \vspace{0.25in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\end{enumerate}

\noindent {\bf\large 4.} Bob has an investment worth \$1,000,000 which is earning 12\% interest compounded {\bf annually}. For as long as he can, Bob plans to  withdraw \$200,000 each year. 

\begin{enumerate}[(a)]
\item How many {\bf full} withdrawals will Bob get to make?

  \vspace{0.25in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\item How much will Bob's final (partial) withdrawal be?

  \vspace{0.25in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\end{enumerate}

\noindent {\bf\large 5.} Everyone can retire a millionaire. S\&P 500 index funds historically have averaged about a 10\% annual return. Suppose that you start making deposits into an index fund earning 10\% compounded monthly when you are 20 years old. How much would you need to deposit each month in order to have \$1,000,000 when you are 65?

  \vspace{0.25in}
   
 Record the Excel command(s) you used to find your answer:

\vspace{0.4in}

\noindent {\bf\large 6.}  The Frenkels just bought a \$350,000 house. They put 20\% down and took out a 30 year mortgage with a 3.75\% interest rate (compounded monthly). 

\vspace{0.1in}

\begin{enumerate}[(a)]

   \item Loan amount? \underline{\hspace{1.75in}} \hfill
           Monthly payment? \underline{\hspace{1.75in}}
   
   \vspace{0.2in}
   
   \item How much interest will they pay during their second year? \underline{\hspace{1.7in}}
   
   \vspace{0.1in}

   \item Fill out the following table:
   
   \vspace{0.05in}
   
   \begin{tabular}{|c|c|c|c|c|c|} \hline
   Month & Beg. Balance & Payment & Interest & Amt. to Principal & End Balance \\ \hline
   76     & \myspace & \myspace & \myspace & \myspace & \myspace \\ \hline
   77     & \myspace & \myspace & \myspace & \myspace & \myspace \\ \hline
   \end{tabular}
   
   \vspace{0.05in}

   \item 10 years into the loan, the Frenkels decide to refinance their mortgage. They start a new 15 year mortgage at 3.25\% (compounded monthly).
             What is their new payment?
   
   \vspace{0.1in}
             
\hfill \hfill  \underline{\hspace{3in}}
   
   \vspace{0.1in}

    \item (Back to the original loan.) If the Frenkels pay \$5,000 a month, how long would it take them to pay off their house? What would their final (partial) payment be?

   \vspace{0.2in}
             
\hfill \hfill  It would take \underline{\hspace{0.5in}} years and \underline{\hspace{0.5in}} months. 
\hfill Their last payment would be \$\underline{\hspace{1.5in}}  

\end{enumerate}


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