Problem 1. A salesperson tells you that you can buy the car you are looking at for $3000 down and $200 a month for 48 months. If interest is 14% compounded monthly:
a) What is the selling price car?
b) How much interest will you pay during the 48 months?
Problem 2. A man deposits $2000 in an IRA on his 21st birthday and on each subsequent birthday up to and including his 29th birthday (9 deposits in all). The account earns 8% compounded annually.
a) If he leaves the money in the account without making any more deposits, how much will he have on his 65th birthday, assuming the account continues to earn the rate of interest?
b) (Same man as in question part a) How much would be in the account on his 65th birthday, assuming the account continues to earn the same rate of interest?
Problem 3. A loan company will loan up to 60% of the equity in a home. A family purchase their home 8 years ago for $83,000. The home was financed by paying 20% down and signing a 30 year mortgage at 11.25% for the balance. Equal monthly payments were made to amortize the loan over the 30 year period. The market value of the house is now $95,000. After making 96th payment, the family applied to the loan company for the maximum loan. How much will they receive?