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1. You are starting a new job and the employer has offered you two different salary arrangements. You can choose to have $100,000 per year
1. You are starting a new job and the employer has offered you two different salary arrangements. You can choose to have $100,000 per year for the next two years paid at the end of each year, or you can have $85,000 per year for the next two years paid at the end of each year, along with a $25,000 signing bonus today. If the interest rate is 10% and it is compounded monthly, which do you prefer and why? (6 pts) 2. You want a 15-year fixed rate mortgage for $90,000 for a vacation cabin. Your bank will loan you the money at a 7 percent APR for a 180-month loan. However, you can only afford to pay $500 a month, so the bank agrees to let you pay the 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 $500? (6pts)
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