Questions
1. Marie, an employee at McCormick, has determined that she will need $5500 per month in retirement over a 30-year period. She has forecasted that her money will earn 7.2% compounded monthly. Marie will spend 25-years working toward this goal investing monthly at an annual rate of 7.2%.
How much should Marie’s monthly payments be during her working years in order to satisfy her retirement needs?
Hint: Find how much Marie must have at retirement, then find the monthly payments to reach that goal.
What maximum amount could Marie withdraw each month so that her balance never decreases (nearest dollar)?
2. Kathy plans to move to Maryland and take a job at McCormick as the Assistant Director of HR. She and her husband Stan plan to buy a house in Garrison, MD and their budget is $500,000. They have $100,000 for the down payment and McCormick will pay for closing costs. They are considering either a 30 year mortgage at 4.5% annual rate or a 15 year mortgage at 4%. Calculate the monthly payment for each.
Property taxes and insurance will add $1,000 per month to which ever mortgage they choose. What should Kathy and Stan do?