You are celebrating your 28th birthday today. You have decided to set up a retirement account and start depositing an equal amount of money into the account each month beginning one month from today. How much will be in the account on your 60th birthday, if your monthly investment is $840? Assume your investments will return 11 percent per year throughout the investment period.

$2,954,997.97

Explanation:

The computation of the amount on the 60th birthday is shown below:

Future value at Ordinary Annuity = Monthly investment  × (((1 + interest rate )^number of years - 1) ÷  interest rate)

= $840 × (((1+ 11 ÷ 1200)^(32 × 12) - 1) ÷ (11 ÷ 1,200))

= $2,954,997.97

The 1,200 is come from

= 12 months × 100

And, the 32 years is come from

= 60th birthday - 28th birthday

= 32th birthday

We simply applied the above formula to determine the amount on the 60th birthday

of the three mortgage options that demarco and tanya have to choose from, the balloon payment mortgage would be their best option, over adjustable payment and fixed payment plans.ultimately, the balloon payment plan would save demarco and tanya overall, in interest, would cost less monthly, and they would only have to make these payments for 8 years, opposing to 30 years for adjustable or fixed payment plans. 

overall, demarco and tanya would save $80,811 if they chose balloon payments over fixed payments, and would save $116,711 if they choose balloon payments over adjustable payments. benefits with choosing fixed payments over adjustable payments is that, in the end, the payments will still be $836.30 a month, while with adjustable payments, the initial monthly payments will be $763.38 to $1082.70 a month, ultimately leading to a more costly purchase. benefits with choosing fixed payments over balloon payments are not present. benefits in choosing adjustable payments over is that it has a lower interest rate, and starts with lower monthly payments initially. benefits in choosing adjustable payments over balloon payments include a lower interest rate, and lower initial monthly payments. benefits in choosing balloon payments over fixed payments include lower interest rates, lower overall price, lower monthly payments, takes less time to pay off, and does not require a downpayment. benefits in choosing balloon payments over adjustable payments include, lower monthly payments (when averaged), takes less time to pay off, and lower overall price.

hence, option c, balloon payments, is the best option for demarco and tanya to make this purchase, for it will save them a minimum of $80811, and a maximum of $116,711.