1.You just bought a dream house for $400,000, you paid 20% of it as down payment and...
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1.You just bought a dream house for $400,000, you paid 20% of it as down payment and applied for a 30-year mortgage to finance the remaining part. The mortgage payment is scheduled at the end of each month. The 30-year fixed mortgage rate is 5% compounded monthly. How much is the monthly payment for this mortgage? (2 pts.)
2.You just signed a contract with a publisher in which you will receive the following payments for the next five years: $10,000, $20,000, $30,000, $40,000, and $50,000 (from t=1 to t=5). You will then receive an annuity of $85,000 a year from Year 6 (t=6) through the Year 15 (t=15). The appropriate discount rate is 10 percent. How much is the contract worth now (at t=0)? (3 pts.)
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