MAT144 Week 4 Discussion

DQ 1

MAT144 Week 4 Discussion. Use the digits of your birthday as the amount of your initial investment (i.e., 6/25 is $625), calculate the value of this investment after 10 years at 3.5% APR for interest compounded yearly, quarterly, monthly, and daily. What do you notice?

DQ 2

MAT144 Week 4 Discussion

Choose two of the following statements and determine whether each makes sense. Support your reasoning with calculations.

1. 1. Assuming that a 3-year car loan has a lower interest rate than a 5-year loan, people should always select the 3-year loan.
2. 2. After depositing $1,500 in an account with an APR of 4%, my balance at the end of the first year was $(1,500)*(1.04).
3. 3. I have $1,000 to invest. One account will pay 5% interest the first year and 10% interest the second year. Another account will pay 10% interest the first year and 5% interest the second year. It does not matter which account I choose, because I will end up with the same amount of money either way.
4. 4. I can put away $1,000 towards retirement today or $1,000 ten years from now. Either way I have invested the same amount so I will end up with the same amount when I retire in 25 years.
5. 5. I like to keep all my money, so I pay only the minimum required payment on my credit card.
6. 6. If I can afford to pay for a car out of pocket, I should still take out a loan and make only the monthly minimum payments. That way, the money in my savings account will continue to grow.
7. 7. Bank A compounds interest once a month, and has no charge for a checking account. Bank B compounds interest every day, but there is a $2/month charge for a checking account. Both banks yield 1.2% APR. Bank A is always the best deal.
8. 8. If it takes 20 years for a $100 dollar investment to double in value at a certain bank, then it should also take 20 years for a $500 investment to double in value.
   

   MAT144 Week 4 Discussion

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