Answer & Explanation:Questions to answer are attached Problem Set 4Directions:1. Solve the following problems. Hand write your solutions and explanations on yourown paper. Do not write answers on this page.2. Show your work AND explain your reasoning using complete English sentences.Explanations must directly follow the solution for each part of the problem.3. You must write your name on the top right of the paper you turn in.4. You must write the title of this problem set on the top of your paper.5. Turn in your solutions following the directions in the assignment information onBlackboard.

problem_set_4_3___2_.pdf

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Problem Set 4

Directions:

1. Solve the following problems. Hand write your solutions and explanations on your

own paper. Do not write answers on this page.

2. Show your work AND explain your reasoning using complete English sentences.

Explanations must directly follow the solution for each part of the problem.

3. You must write your name on the top right of the paper you turn in.

4. You must write the title of this problem set on the top of your paper.

5. Turn in your solutions following the directions in the assignment information on

Blackboard.

Formulae for Finance

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1. Miss Crystal Palace just purchased – you guessed it – a crystal palace for $650,000. She

makes a 25% down payment and finances the balance with a mortgage at an interest rate of

5.6% for 15 years, making monthly payments.

a. What amount will she borrow?

b. Complete the amortization table for the first two payments. Show all work?

2. Meagan invests $1,200 each year in an IRA for 12 years in an account that earned 5%

compounded annually. At the end of 12 years, she stopped making payments to the

account, but continued to invest her accumulated amount at 5% compounded annually for

the next 11 years.

a. What was the value of the Ira at the end of 12 years?

b. What was the value of the investment at the end of the next 11 years?

c. How much interest did she earn?

Problem Set 4 – Grading Criteria

1. Total: 10 points

a. Total: 2 points

Breakdown

Correct work: 0.5 points

Correct answer: 1 point

Sentences explaining reasoning: 0.5 points

b. Total: 8 points

Breakdown

Payment

Correct work: 2 points

Correct answer: 1 point

Sentences explaining reasoning: 1 point

Amortization Table

Correct work: 2 points

Correct answer: 1 point

Sentences explaining reasoning: 1 point

2. Total: 10 points

a. Total: 4 points

Breakdown

Correct work: 1 point

Correct answer: 2 points

Sentences explaining reasoning: 1 point

b. Total: 4 points

Breakdown

Correct work: 1 point

Correct answer: 2 points

Sentences explaining reasoning: 1 point

c. Total: 2 points

Breakdown

Correct work: 0.5 points

Correct answer: 1 point

Sentences explaining reasoning: 0.5 points

…

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