You have just won the lottery and will receive $660,000 in one year. You will receive payments for 19 years, and the payments will increase 5 percent per year. If the appropriate discount rate is 12 percent, what is the present value of your winnings?

Multiple Choice

$22,707,416

$6,662,266

$6,395,775

$76,630

$22,707,416

You need a 30-year, fixed-rate mortgage to buy a new home for $180,000. Your mortgage bank will lend you the money at a 6.6 percent APR for this 360-month loan. However, you can afford monthly payments of only $850, so you offer to pay off any remaining loan balance at the end of the loan in the form of a single balloon payment.

How large will this balloon payment have to be for you to keep your monthly payments at $850?

Multiple Choice

$23,103.86

$351,425.06

$337,908.71

$327,771.45

$46,908.59