Question #1 – Simple Interest
Roger borrowed money to finance a new boat. The bank offered Jack $28,000 of the $35,000. To make up the difference, Jack secured a small personal, simple interest loan. Jack’s loan was structured as an installment loan that required him to pay $297.50/month for 30 months. Calculate the amount financed, total installment price, the finance charge, and the interest rate.
Question #2 – Annuity Payment
James is saving money to open a corner store. He needs $15,000 in two years to make his down payment and is investing in an annuity yielding an annual interest rate of 7% compounded monthly. If the annuity requires that James make monthly investments, what annuity payment must James make to save $15,000?
Question #3 – Mortgage Financing
Peter and Rachael purchased a home costing $269,000. A mortgage company financed the home at a 5.5% rate and 30-year term, requiring that they make a 15% down payment. Calculate the down payment and monthly mortgage payment that Peter and Rachael must pay.
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