Living in San Diego has its challenges

Living in San Diego has its challenges Student Help Examine calculations and reply to at least two of your classmates’ posts by adding recommendations to extend their thinking or posing questions to help them consider components they may have missed
 

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1. Living in San Diego has its challenges.  One being how expensive it is.  I make a decent salary but my divorce has hit me pretty hard paying a costly child support to my kid’s mother who does not work.  I have always wanted to buy a house but pulled back when I was having trouble with my children’s mother and decided on separating.    When I do buy I want to avoid paying private mortgage insurance.  They only way I can do that is if I come up with a 20% down payment.  If I want a home of $250,000 I would need to put down $50,000.  I do not have that.  In order to see the present value of $50,000 over 12 years’ time with a 10% interest on my money I would need to calculate:
12x +.10x = 50000
12.10x = 50000
_____     _____
12.10       12.10
X = $4,132.23 Would be what I need for the present value to invest today
 
What amount would you like spent yearly to fund this grand party?
-$10,000 to fund this grand party
How much money do you have to leave to your heirs 50 years from now assuming that will compound at 6% interest?
50 years = 600 payments
10000*600 = 6000000*.06 = 360000 + 6000000
I would be able to fund $6360000 for the party.  Yes this party will be one for the ages.
 
Assuming that you have not invested anything today, how much would you have to invest yearly to fully fund the annuity in 50 years, again assuming a 6% monthly compounding rate?
PV0=∑n=1NCF(1+r)n=CF(1+r)1+CF(1+r)2+…+CF(1+r)N
 
I would need to invest $232,800 yearly to fully fund the annuity in 50 years
 
2. I have been saving a college fund for my children, but I am still approximately $35,000 short for the colleges that they have chosen to attend.  Hopefully, by the time they are able to attend college they will have many scholarships and grants and we will not have to rely on my current savings efforts.  However, to be prepared in time for college in 12 years, the Present Value Formula, is =FV(RATE,NPER,PMT,FV,TYPE).
FV = 35,000
RATE = 8%
NPER = 12 years
PMT = 0
PV =PV(10%,12,0,35000,0) = $11,152.08
TYPE = 0
You wish to leave an endowment for your heirs that go into effect 50 years from today. You don’t want to be forgotten after you pass so you wish to leave an endowment that will pay for a grand soirée yearly and forever. What amount would you like spent yearly to fund this grand party? How much money do you have to leave to your heirs 50 years from now assuming that will compound at 6% interest? Assuming that you have not invested anything today, how much would you have to invest yearly to fully fund the annuity in 50 years, again assuming a 6% monthly compounding rate?
If my family was going to have a grand party in honor of me, I would like them to have at least 20,000 to enjoy the event.  With an initial deposit of $20,000 paying a 6% annual interest rate, for 50 years and compounding annually, the formula PV0=(CF)(1−[1/(1+r)N])/.06 will provide the amount of money that will be in the account.

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