1. Suppose that you take out a loan for $110000 to purchase a house. You are required to make monthly payments, and the APR is 3.5%. How much interest will you end up paying over the life of the loan (30 year mortgage)?
2. Suppose that you are evaluating the following investment opportunity. At the end of the the next five years you estimate that you will receive the following cash flows, $400, $200, $100, $500, and $400. At the end of every year following year five you will receive a cash flow that is 4% larger than the prior cash flow. If the cost of capital is 9% how much should you be willing to invest in this opportunity?