You lend your friends $300,000 for 6 years. According to the agreement, your friend has to repay $80,000 annually for the first four year with a fixed interest rate of 16% compounded annually.
1. Your friend tries to bargain for a 2% lower interest charged for the remaining periods. What should be the annual payment for the last two year?
2. if your friend insists to repay exactly the same amount as the previous years, how much would be the annual interest Rate for the last two years?
Peter deposits $70,000 in a fixed account earning an annual compounded interesr of 14.25% on his graduation day (march 1995) he also decides to save monthly in a saving account earning 12% annual interest compounded monthly.
In march 2000, he will spend all his money from this two accounts to purchase a home worth $1,500,000 (total balance of these 2 accounts are zero)
1. how much is the total balance of his saving account in march 2000?
2. how much is each monthly saving in his saving account in order to buy his home
3. if the home's price is changed. he has to set aside 40% of his monthly salary of $50,000 and deposits them in his savings account earning 12% annual interest. how much would be the new price of the home?