1. If you purchase a car that costs $25,000 with a $7,000 down payment and the balance financed at an annual rate of 5.8% for 5 years with monthly payments, what will be the remaining balance of the loan after the second payment. Assume end-of-month payments. Also calculate the Effective Annual Rate for this loan. (6 pts.)

2.

a. If you invest $250 per month at the beginning of each month for the next 10 years into an account earning 7% annually, how much will you have in exactly ten years?

b. If at the end of the ten years in part a above you increase your monthly payment to $350 per month, what will be the total value of the account after another ten years has gone by? How much of this total value represents the contributed principal, and how much is interest? (6 pts. total)