1. You have just found your dream home. The selling price is $120,000. You will put $20,000 down and obtain a 30-year fixed-rate mortgage at 7.25% compounded monthly for the rest.
Assume that monthly payments begin in one month. What will each payment be (rounded to the nearest dollar)?
$819
$725
$682
$511
$401
2. You have just returned from a wonderful sales convention in Williamsburg. During your travels, you ran up an $5,000 bill on your credit card, which has an annual interest rate of 12%, compounded monthly. If you make no further charges on your credit card and make the monthly minimum payment of $100, how long will it be before you pay off the credit card balance?
50 months
70 months
84 months
100 months
164 months