Question 1:

Consider a $20,000 loan to be repaid in equal installments at the end of each of the next 5 years. The interest rate is 8%.

1. Set up an amortization schedule for the loan. Round your answers to the nearest cent. Enter "0" if require

b. How large must each annual payment be if the loan is for $40,000? Assume that the interest rate remains at 8% and that the loan is still paid off over 5 years. Round your answer to the nearest cent. $

c. How large must each payment be if the loan is for $40,000, the interest rate is 8%, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part b, but the payments are spread out over twice as many periods. Round your answer to the nearest cent. $

Question 2:

A mortgage company offers to lend you $85,000; the loan calls for payments of $7,757.86 at the end of each year for 30 years. What interest rate is the mortgage company charging you? Round your answer to two decimal places.

%

Question 3:

You need to accumulate $10,000. To do so, you plan to make deposits of $1,500 per year - with the first payment being made a year from today - into a bank account that pays 8.73% annual interest. Your last deposit will be less than $1,500 if less is needed to round out to $10,000. How many years will it take you to reach your $10,000 goal? Round your answer up to the nearest whole number. year(s)

How large will the last deposit be? Round your answer to the nearest cent. $

Question 4:

Assume that your aunt sold her house on December 31, and to help close the sale she took a second mortgage in the amount of $40,000 as part of the payment. The mortgage has a quoted (or nominal) interest rate of 10%, but it calls for payments every 6 months, beginning on June 30, and is to be amortized over 15 years. Now, 1 year later, your aunt must inform the IRS and the person who bought the house about the interest that was included in the two payments made during the year. (This interest will be income to your aunt and a deduction to the buyer of the house.) To the closest dollar, what is the total amount of interest that was paid during the first year?

Question 5:

Your company is planning to borrow $2.5 million on a 3-year, 8%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal? Round your answer to two decimal places.

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