1) You have a 30-year fixed rate Mortgage to buy a new home for $300,000. Your mortgage bank will lend you the money at 6% APR compounded monthly. You can only afford payments of $1,500 per month. Therefore, you decide the only way you make this work is to offer to make a lump sum (also known as a balloon) payment along with the LAST loan payment. How much would this have to be?

2) You plan to retire in 30 years. In 20 years, you need to want to give your daughter a $50,000 gift. You think you will want $4,900 per month when you retire for 25 years (the first withdrawal will come one month after you retire) You will begin saving an amount to meet your retirement goals one month from today.

If you think you can make 9% APR monthly on your investment. How much will you need to save each month for the next 30 years to meet your retirement goals?

Now assume you want to make annual savings accounts instead to meet your goals. You will begin saving an account to meet your retirement goals one year from today.