Question 1. Suppose the interest rate is 7% APR with monthly compounding. What is the present value of an annuity that pays $80 every 3 months for 4 years?
The present value of the annuity is $ (round to two decimal places)
Question 2. If you deposit $1 into a bank account that pays 0.5% per month for three years, the amount you will receive after the three years is: $ (round to 5 decimals)
Question 3. You are buying a house and the mortgage company offers to let you pay a "point" (1.0% of the total amount of the loan) to reduce your APR from 5.50% to 4.75% on your $400,000, 30-year mortgage with monthly payments.
If you plan to be in the house for at least 5 years, should you do it?
The monthly mortgage payment at 5.50% APR is $ (round to the nearest cent)
Question 4. If the rate of inflation is 4%, what nominal interest rate is necessary for you to earn a 2% real interest rate on your investment?
The nominal interest rate is ______% (enter your response as a percent reoundedto one decimal place