1. You want to buy a used Dodge Dart in 2 years when you graduate. The price of the car now is $4986.15, but you have read that the price will drop by 5% per year during the next 2 years. If you will be able to get a 4 year loan at 14.9% annual interest with monthly payments, how much will the monthly payments be when you purchase the car 2 years from now?
2. You have just graduated from MSU, and have landed a job with a starting salary of $75,000 per year. You have decided to buy a house, and you have $10,000 saved up from your part-time job at Qdoba. The Eighth National Bank of DeWitt is offering to give you a 30-year mortgage at 9.7% annual interest with monthly payments, but they will not give you a loan that will involve monthly payments of more than 25% of your income. Assuming you will borrow as much as you can from this bank, and assuming closing costs of 4% of the amount borrowed, what is the highest price you will be able to pay for the house?
3. You are working for Humdrum Corp. You are so bored, you want to start your own business. A new business takes money, so you start a 5-year plan. At an interest rate of 9 percent per year, how much must you invest each year (equal amounts beginning next year) to have $85,000 in your new business fund in 5 years?