Use the following to answer questions 15-18. You currently live (rent free) in your parents' basement but it's a bit awkward when you bring dates home. Your friends are looking for a new roommate and have asked if you're interested in moving in. Your share of the rent (which includes all utilities) will be $800 per month and you will be signing a two year lease. You parents think you should save your money so you can buy a house when you graduate in two years. If you stay living in your parents' basement, and deposit the money you save by not having to pay rent into a savings account at the beginning of each month, your parents have offered to give you a gift equal to the amount you have saved towards a down payment on your first home. Assume the bank is offering a 5% annual interest rate, compounding monthly, on new savings accounts. If you take your parents up on their offer, how much will have (in total) for a down payment on a home when you graduate? Round to the nearest whole dollar. $3, 444 $20, 465 $40, 297 $40, 465 Your monthly rent payment in this example would be considered _______ an ordinary annuity an annuity due amortization a perpetuity Suppose you took your parents up on their offer and are now getting ready to graduate. You have decided that you can afford a house payment of $1,000 per month. The bank has offered to give you a 30 year, fixed rate mortgage at an annual interest rate of 4%. What is the maximum you can pay for a house? $209, 461 $212, 905 $229, 926 $249, 926 You decide to rent out a room in your new home to your best friend for $500 per month. If you add the extra money to your monthly house payment, how many years will it take you to pay off your mortgage? 12 years 15.68 years 30 years 188 years