1. You purchase a home for $100,000 with a 20 year mortgage at 12%. If you make annual mortgage payments, what is your annual payment?

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How much interest did you pay in the first year and how much was your mortgage reduced in the first year?

2. If a creditor owes $24,000 and annually pays $3,000, how quickly will the loan be retired if the interest rate is 8 per cent annually?

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3. You buy a TV for $1,000 on credit. You pay no money down. No payments are required for 1 year. Interest is 11%. Only annual payments are allowed.

a. What is your payment if you pay it all off at the end of the year?

b. What is your annual payment if you pay it off in two years?

c. What is your annual payment, if instead of buying, you lease it for 4 years, but there is no payment due for the first year, interest is 11%, and the ending buy out option is $200.

4. You lease a sofa for 4 years. APR is 11%. Annual payments starting up front at $180 (basically, $15 per month). There is a buyout option at the end of the lease for $600. What would the sofa cost to buy based on the foregoing?

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