Question

10.A (7 points) You just bought a house for 500,000 dollars. You put 100,000 + 100.000 dollars as the down hly compounding. You get a payment and borrow the rest from a bank at 3.75 percent APR with monthly 30-year mortgage. What is your monthly mortgage payment? Show your payments go to interest? Just 10B. (3 points) In the first year of your mortgage, how much of your paymer give me the answer. 11. (10 points) What is the present value of an annuity that pays 1000 donars a week for 4 vears? Assume the payments come at the beginning of each week and that there are 32 weeks in a year. The interest rates is 6 percent APR with weekly compounding. Show your work. 12. (10 points) A financial advisor promises to triple your money in 30 years. What is the APR interest rate they are promising you. Show your work.

Answer 1

10A) and 10B)

Monthly payment [Pxrx(1+r)^n]-[(1+r)^n-1] Here, 1 Interest rate per annum 2 Number of years 3 Number of compoundings per per annum 1:3 Interest rate per period (r) 2x3 Number of periods (n) Loan amount (P) 3.75% 30 12 0.313% 360 400,000 $ Monthly payment $ 1,852.46 (400000*0.313%x(1+0.313%)^360=(1+0.313%4360-1) Interest in first payment $ 1,250.00 =400000*3.75%/12

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