1. You are given a choice between purchasing a perpetuity and an annuity which both pay you $1000 per month. You get to pick the term of the annuity. Assume payments are calculated to the nearest dollar. The current interest rate is 4%. A. How long does the annuity need to be in order for you to be indifferent between the perpetuity and the annuity? B. How does the answer change if interest rates increase to 6%? C. If the payment is $5000 per month?

 2. You want to buy a $250,000 house and can finance 80% of the purchase price for 30 years. (4) A. What is the down payment and monthly Principal and Interest Payment you should expect with a 3% mortgage rate? B. You have the choice of a 15 year mortgage at 1.5% and a 30 year mortgage at 3%. Which mortgage would you take and why?