1. You're thinking about borrowing a $6000 personal loan. The interest rate on the loan is 10% with quarterly compounding. You believe you can make a quarterly payment of $400. How many years will it take you to pay off the loan?
2. A young couple decide to take advantage the current first-time home buyer credit and buy a new house. With their combined income, they can afford to make a maximum of $650 monthly payment. With their credit history, they can borrow a 30-year fixed rate mortgage loan at 6.4% (mortgage loans compound monthly). What's the maximum amount they can borrow?
3. Your auto insurance company offers you the following payment options on your $1,000 annual premium - you can elect to pay off the $1,000 balance today or make 4 quarterly payments with the 1st payment to be made today. The APR on the quarterly payment option would be 27% with quarterly compounding. If you choose the quarterly payment option, what would be the amount of each quarterly payment?
4. Your auto insurance premium of $1500 is due today. You insurance company is giving you the "easy financing" option of making 12 monthly payments, with the 1st payment starting today. The interest rate on this financing option is 18.00% with monthly compounding. What's the monthly payment amount?