1) Solve the problem.

The cost of a home is financed with a $290,000, 30-year fixed-rate mortgage at 7%. The buyer will make 360 payments of $1928.50. Prepare loan amortization schedule for the first three months of the mortgage. Round to the nearest cent.

2) Use the following advice from most financial advisors to solve the problem.

Spend no more than 28% of your gross monthly income for your mortgage payment.

Spend no more than 36% of your gross monthly income for your total monthly debt.

Round all calculations to the nearest dollar, if necessary.

Suppose that your gross annual income is $60,000.

(a) What is the maximum amount you should spend each month on a mortgage payment?

(b) What is the maximum amount you should spend each month for total credit obligations?

(c) If your monthly mortgage payment is 75% of the maximum amount you can afford, what is the maximum amount you should spend each month for all other debt?

3) Determine the periodic deposit. Round up to the nearest dollar. How much of the financial goal comes from deposits and how much comes from interest?

Periodic Deposit: $ ? at the end of each month

Rate: 7.5% compounded monthly

Time: 3 years

Financial Goal: $25,000

4) Determine the effective annual yield for each investment. Then select the better investment. Assume 360 days in a year. Round to the nearest hundredth of a percent when necessary.

a) 4.4% compounded semiannually; 4.3% compounded daily