Question 1:

In August 2008, a car manufacturing company was offering the choice of a 2.4% loan for 72 months, or $7000 cash back on the purchase of a $26,559 car.

(a) If someone took the 2.4% loan offer, how much will the monthly payment be?

(b) If someone took the $7000 cash-back offer and can borrow money from their local credit union at 7.2% interest compounded monthly for six years, how much will the monthly payment be?

(c) Which of the two offers is more favorable?

(a) The monthly payment someone would pay for the 2.4% loan offer would be $

(Round to the nearest cent as needed.)

Question 2::

You are considering the purchase of a condominium to use as a rental property. You estimate that you can rent the condominium for

$1,300 per month and that taxes, insurance, and maintenance costs will run about $300 per month. If interest rates are 12% compounded monthly, how large a

20-year mortgage can you assume and still have the rental income cover the monthly expenses? The mortgage is $

enter your response here.

(Round to the nearest cent as needed.)