Geometric series ( nhân)

Application DO IT !
Suppose an employee of a company is retiring and has the choice of
two benefit options under the company pension plan. Option A
consists of a guaranteed payment of $2100 at the end of each month
for 20 years. Alternatively, under option B, the employee receives a
lump-sum payment equal to the present value of the payments
I described under option A.
thank (a) Find the sum of the payments under option A.
toan (b) Find the lump-sum payment under option B if it is determined
11am . by using an interest rate of 6% compounded monthly. Round the
answer to the nearest dollar. 46%
is

9/19/2021 INTERNATIONAL UNIVERSITY, VNU-HCMC, VIETNAM 13

a) The sum of the payment under option A :

5=2100×12×20
=
$50400 .

b) Lump -
sun payment under option B:

pv
210011 (1+9121-1220)
-

( B)
=

6%
=
293,119.6205
T2
Geometric series ( nhân)
Application DO IT !
chip
'
the
A $245,000 mortgage for 25 years for a new home
is obtained at the rate of 9.2% compounded
monthly. Find
(a) the monthly payment, (b) the interest in the
first payment,
(c) the principal repaid in the first payment, and (d)
the finance charge.

9/19/2021 INTERNATIONAL UNIVERSITY, VNU-HCMC, VIETNAM 14

 a) The monthly payment :

All
n
-
Ceti )
Pv =

245,000 =
All -

11+9,22%1-25.14
9,1%
12
A =
$2089.68
b) The first interest payment :

I = 245,000 . 9,2% = 1878.33

12

c) The first principal repaid in the 1st payment :

D= 2089.68 - 1878.33=211.34

d) The finance charge :( total interest paid ) .

Z interest I 2089.68×12×25 -

245,000=8/381904