Answer:
- $2,670.21
- $1,068.09
Step-by-step explanation:
1. The payment is a fixed amount so is an annuity. Using the Future value of an annuity factor table, we can find the annuity factor for 18 years at 8%.
Future value of annuity = Payment * Future value of an annuity factor , 18 years, 8%
100,000 = Payment * 37.4502
Payment = 100,000/37.4502
= $2,670.21
2. Future value of annuity = Payment * Future value of an annuity factor , 18 years, 8%
140,000 = Payment * 37.4502
Payment = 140,000/37.4502
= $3,738.30
How much more would they pay = 3,738.30 - 2,670.21
= $1,068.09