2. Use the formula to solve the following problem. Henry just got his tax refund back ($2,400) and would like to put some away for a trip after graduation. He estimates that he will need about $1750 for the trip he has in mind. Graduation is two years away and he can deposit funds in an account that will pay him 6% compounded quarterly. If Henry will not be depositing any more funds for the two years , how much must Henry set aside now out of his tax refund check in order to have the $1750 for his trip in two years?

1. Mountain Products Inc. just negotiated a $630,000 commercial loan which is to have

LEVEL TOTAL PAYMENTS

for

four years at a rate of 6%. Write out an amortization schedule for this loan and answer the questions below:

How much is the total payment each year? ___________________

What is the balance of the loan after year two? ________________

How much is paid on principal in year three? _________________

How much interest will be paid in year four? _______________

What is the total amount of interest paid over the life of the loan? __________________