1. You borrow $20,000 from your parents to make a house down payment at a mutually agreedupon annual interest rate of 5%, and a payback period of 5 years (direct reduction loan). What will be your annual, or monthly, payment amounts?
2. On a child’s 10 birthday, parents decide that they can afford to save $550 per year toward the future purchase an automobile on the child’s 16th birthday (n=6 years). The interest rate is 4%. Which car will they be able to purchase? a. Used Sports car for $10,500 b. Used Small SUV for $7500 c. Used Econobox for $3500