Problem 4 and 5-7 House Appreciation and Mortgage Payments Say that you purchase a house for $272,000 by getting a mortgage for $240,000 and paying a $32,000 down payment. If you get a 30-year mortgage with an interest rate of 7 percent, what are the monthly payments? (Do not round intermediate calculations and round your final answer to 2 decimal places.) ayment What would the loan balance be in ten years? (Round the payment amount to the nearest cent but do not round any other interim calculations. Round your final answer to 2 decimal places.) Loan balance If the house appreciates at 3 percent per year, what will be the value of the house in ten years? (Do not round intermediate calculations and round your final answer to 2 decimal places.) Future value Problem 5-21 Present Value (LG5-3) Given a 7 percent interest rate, compute the present value of payments made in years 1, 2, 3, and 4 of $1,950, $2.150, $2,150, and $2,450, respectively. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Present value Problem 5-27 Present Value of a Perpetuity (LG5-5) A perpetuity pays $220 per year and interest rates are 7.3 percent. How much would its value change if interest rates increased to 8.8 percent? (Round your answer to 2 decimal places.) Change in value Did the value increase or decrease? increase O decrease Oil prices have increased a great deal in the last decade. The following table shows the average oil price for each year since 1949. Many companies use oil products as a resource in their own business operations (like airline firms and manufacturers of plastic products). Managers of these firms will keep a close watch on how rising oil prices will impact their costs. The interest rate in the PV/FV equations can also be interpreted as a growth rate in sales, costs, profits, and so on. Average Oi1 Prices Per Per Barrel ipped Per Year 1949 1950 Barrel $2.54 $2.51 Year Year Barrel $ 3.39 $ 3.39 S 3.89 1971 1972 1993 1994 $14.25 $13.16 $14.62 1951 $2.53 $2.53 $2.68 1973 1974 1975 1976 Book 1995 1996 1997 1998 1952 $ 6.87 $ 7.67 $ 8.19 $ 8.85 $ 9.00 $18.46 $17.23 Print 1953 1954 $2.78 $2.77 $2.79 $10.87 1955 erences 1977 1999 $15.56 $26.72 $21.84 1956 1978 2000 2001 2002 2003 2004 1957 $3.09 $3.01 $2.90 $2.88 $2.89 1979 1980 $12.64 $21.59 $31.77 $28.52 $26.19 $25.88 1958 1959 1960 $22.51 $27.54 1981 1982 $38.93 1961 1983 1984 2005 2006 $46.47 1962 $2.90 $2.89 $2.88 $58.30 $64.67 1963 1964 1965 1966 1967 1968 1969 1970 1985 1986 1987 1988 1989 1990 $24.09 $12.51 $15.40 $12.58 $15.86 $20.03 $16.54 $15.99 2007 2008 2009 2010 2011 2012 2013 $91.48 $53.48 52.86 $2.88 $71.21 687.04 $93.02 $97.91 $93.26 $48.79 $2.92 $2.94 $3.09 $3.18 1991 1992 2014 2015 Using the 1949 oil price and the 1961 oil price, compute the annual growth rate in oil prices during those 12 years. (Round your answer to 2 decimal places.)
