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1. Loan Amortization problem - Bubba Gumps new shrimp boat cost $70,000. He paid $25,000 up front and signed a 10-year, $45,000 mortgage at 11%.
1. Loan Amortization problem - Bubba Gumps new shrimp boat cost $70,000. He paid $25,000 up front and signed a 10-year, $45,000 mortgage at 11%.
a. What is the amount of each monthly payment?
b. Produce a loan amortization schedule for the first four payment periods.
c. What is the total interest Bubba will pay on this loan, assuming he pays it according to schedule?
d. Lets say he comes into some dough and wants to pay off the loan immediately after making the 27th payment. How much does he owe at that point?
2. Retirement problem - When only a lad, Chase began investing $750 per month into a mutual fund that has earned on average 11% annually for the past 20 years.
a. How much is Chases account worth today?
b. Assume Chase decides to drop out of society and simply live off this investment. If he continues to earn 11% on the account, what is the maximum amount he can withdraw quarterly, assuming he plans to live 25 more years?
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