You have a $7,000 balance on your car loan at 11% interest. Your favorite aunt has just left you $10,000 in her will. You decided to pay off the car loan and invest the difference. Now you no longer have a $350 per month car payment.

Suggest some ways you might use these additional funds. It would be wise to:

It would be wise  to invest in an Annuity with monthly payment of $350.

Explanation:

You no longer have a $350 per month car payment; and you used to live well without this $350. So it's the best to use this $350 for an invesment.

Annuity is a financial reserved for retirement. Assuming you will be retired in 10 years. Then you invest in an annuity now with:

current rate: 6% ~ monthly rate 0.5%,

Monthly payment of $350 (PMT)

Tenor: 10 years (NPer = 120)

you will have a future value in 10 years as below:

In excel, FV(rate,Nper,PMT) = FV(0.5%,120.350) = $57,538

Then when you're retired, you invest full $57,538 in an retirement annuity to receive a monthly amount for living expenses. Assuming the key factors as below:

Monthly rate: 0.5%

Tenor: 25 years ~ 300 months

PV: $57,538

The monthly amount to be received is PMT(rate,Nper,PV)= PMT(0.5%.300,$57,538) = $370

You will receive about $370 for 25 years in every month of 25 years in retirement.

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

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