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Question 1 You took out a student loan in college and now have to pay $1,200 every year for 20 years, starting one year from

Question 1

You took out a student loan in college and now have to pay $1,200 every year for 20 years, starting one year from now. The annual interest rate on the loan is 7%.

What is the your student loan balance as of now?

Question 2

You take out a 30-year fixed-rate mortgage for $400,000 with an interest rate of 6% (APR).

What is the monthly payment?

Question 3

You win the Publishers Clearing House Sweepstakes. You can choose between getting a lump sum of $7,653,183 now or getting $900,000 every year for 10 years, starting one year from now.

If you take the money now and invest it, you'll expect to earn an annual return of 3%.

Which option should you take? To compare the two options, first find out what is the 10 yearly payments worth to you as of today?

Question 4

You took out some student loans in college and now owe $8,000. You consolidated the loans into one amortizing loan, which has an annual interest rate of 7% (APR).

If you make monthly payments of $200, how many months will it take to pay off the loan? Fractional values are acceptable.

Question 5

You took out a 30-year fixed-rate mortgage to buy a house. The interest rate is 10.8% (APR) and you have to pay $1,390 per month.

What is the original mortgage amount?

Question 6

You took out a fixed-rate mortgage for $589,000. The mortgage has an annual interest rate of 6% (APR) and requires you to make a monthly payment of $3,531.

How many months will it take to pay off the mortgage?

Question 7

You want to buy a house financed with a 30-year fixed-rate mortgage. The best monthly interest rate you could find is 1.2%.

What is the most you can borrow if you can only afford to pay $1,200 per month?

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