# 16 - Practice Quiz Exam2 KEY 1 1 On June 1 you take out a...

This preview shows pages 1–2. Sign up to view the full content.

Practice Quiz - Exam2 – KEY 1 1. On June 1, you take out a mortgage in the amount of \$124,900 at a 6 percent rate compounded monthly. Payments are to be made at the end of each month for thirty years. How much of the first loan payment is interest? Interest rate per month = 0.06/12 = 0.005 Interest = 0.005 x 124,900 = 624.50 2. You have just arranged for a 400,000 mortgage to purchase a home. The mortgage has a 9.25 percent APR and it calls for monthly payments over the next 30 years. However, the loan has a 10 year balloon payment, meaning the loan must be paid off then (the loan requires a balloon payment at the end of the 10th year). How big must the balloon payment be? N = 360 I/Y = 9.25/12 = 0.771 PV = 400,000 CPT PMT = 3,291.28 Balloon payment = PV of remaining payments N = 20x12 = 240 I/Y = 9.25/12 = 0.771 PMT = 3,291.28 CPT PV =359,311.43 3. You recently filed suit against a company. Today, you received three settlement options as follows: Option A: \$10,000 on the first day of each year for 25 years

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

16 - Practice Quiz Exam2 KEY 1 1 On June 1 you take out a...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online