6. You have just sold your house for $1,000,000 in cash. Your mortgage was originally a 30-year mortgage with monthly payments and an initial balance of $800,000. The mortgage is currently exactly 18 years old, and you have just made a payment. If the interest rate on the mortgage is 5.25% (APR), how much cash will you have from the sale once you pay off the mortgage? (Note: Be careful not to round any intermediate steps less than six decimal places.)

7. If the rate of inflation is 4.8%, what nominal interest rate is necessary for you to earn a 3.3% real interest rate on your investment? (Note: Be careful not to round any intermediate steps less than six decimal places.)

8. Use the table for the question(s) below.

Suppose the term structure of interest rates is shown below:

Term	1 year	2 years	3 years	5 years	10 years	20 years
Rate (EAR%)	5.00%	4.80%	4.60%	4.50%	4.25%	4.15%

What is the shape of the yield curve and what expectations are investors likely to have about future interest rates?

A.inverted; lower

B.normal; higher

C.inverted; higher

D.normal; lower

9. In 2007, interest rates were about 4.5% and inflation was about 2.8%. What was the real interest rate in

2007?

A.1.61%

B.1.58%

C.1.62%

D.1.65%

10. You are thinking about investing $5,000 in your friend's landscaping business. Even though you know the investment is risky and you can't be sure, you expect your investment to be worth $5,750 next year. You notice that the rate for one-year Treasury bills is1 %. However, you feel that other investments of equal risk to yourfriend's landscape business offer an expected return of 10%for the year. What should you do?