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Question 1 20 pts You purchased a house five years ago and borrowed $600,000. The loan you used has 300 more monthly payments of $2,864
Question 1 20 pts You purchased a house five years ago and borrowed $600,000. The loan you used has 300 more monthly payments of $2,864 each, starting next month, to pay off the loan. You can take out a new loan for $542,685 at 3.00% APR compounded monthly, with 300 more payments, starting next month to pay off this new loan. and pay off the old loan. If your investments earn 3.00% APR compounded monthly, how much will you save in present value terms by using the new loan to pay-off the original loan? There may be rounding in this case, so pick the closest answer. $57,748 $61,265 $59,481 O $62,455 $64,328 Question 2 20 pts You are trying to decide whether to keep your current car or buy a new car. If you keep your current car you will pay $400 per month (starting next month) on average for maintenance, gas, property tax and insurance. You will make these payments for 10 years. Alternatively, you can buy a new car and pay $28,000 today and $350 per month (starting next month) on average for maintenance, gas, property tax and insurance. You will make these payments for for 10 years. If your investments earn 5% APR (compounded monthly), which alternative is cheaper in present value terms and by how much? keep existing car saves $23,286 keep existing car saves $22,608 keep existing car saves $24,450 O get new car, saves $24,515
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