When Marylyn Monroe was alive she bought a house for $500,000 and made a $50,000 down payment. She obtained a 30-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 9% compounded monthly. After ten years (120 payments) she decided to pay the remaining balance on the loan.

a. Draw the cash-flow diagram that represents this business situation

b. Express the interest rate as an annual effective interest rate

c. What was her monthly loan payment?

d. What must she have paid (in addition to his regular 120th monthly payment) to pay the remaining balance of her loan?

e. Determine how much interest she saved by paying the loan earlier.