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# 1. Twenty years ago you t

1. Twenty years ago you took out a \$200,000 loan. The details of the loan called for uniform payments to occur every month for thirty years. (The first payment occurred one month after receiving the loan.) Interest rates have dropped significantly, and you have decided to refinance the loan. If the original loan interest rate was 6%, compounded monthly and the refinance rate is 3%, compounded monthly, the uniform payment you will make every month over the remaining ten years of the loan is closest to? (Assume the refinance occurs immediately after the final payment of the twentieth year.) .2. Bob made a salary of \$70,000 in 2011. Bob invested 5% of his salary in a retirement account in 2011. Assume Bob receives a 3% raise each future year and continues to invest 5% of his salary each year in his retirement account. What amount of money would Bob have in his retirement account in 2020 if he can earn 7% per year on his investments? That is, the total value of Bob?s investments at the time of his 10th deposit is closest to? As always, assume end-of-period cash flows3. Jerry bought a house for \$500,000 and made a \$100,000 down payment. He obtained a 20-year loan for the remaining amount. Payments were made monthly. The nominal annual interest rate was 9%. After 10 years (120 payments), he decided to pay the remaining balance on the loan. The remaining balance on the loan is closest to ?4. Anna Marie is currently paying \$1,200 per month (based on 6%, compounded monthly) for her home loan and has 100 payments remaining. In addition to her regular monthly payment, she has paid a small amount of extra principal toward the loan. Anna Marie decided to refinance her loan after a drop in interest rates. She calculated her new payment to be \$1,125 per month (based on a rate of 5%, compounded monthly) for the next 100 months. To consider the refinance worthwhile, the most she should be willing to pay for refinance charges is closest to ?