Question
1. What is the value today of $1,600 per year, at a discount rate of 9 percent, if the first payment is received 10 years
1. What is the value today of $1,600 per year, at a discount rate of 9 percent, if the first payment is received 10 years from now and the last payment is received 25 years from today?
$6,001.26 $6,123.73 $13,400.09 $3,717.37 $5,938.18
2. You need a 25-year, fixed-rate mortgage to buy a new home for $200,000. Your mortgage bank will lend you the money at a 8.6 percent APR for this 300-month loan. However, you can afford monthly payments of only $900, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.
How large will this balloon payment have to be for you to keep your monthly payments at $900?
$89,159.44 $736,787.47 $67,494.99 $759,574.72 $789,957.7
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