Question: Problem 1. Your borrow $1,000 for 4 years at 8%. You will repay the loan in 4 equal annual payments. Find the amortization schedule for

Problem 1. Your borrow $1,000 for 4 years at 8%. You will repay the loan in 4 equal annual payments. Find the amortization schedule for the loan. YEAR 0 1 2 3 4 Interest $80 1. Find the payment on the loan 2. Determine how many payments are left 3. Find the present value of the remaining payments YEAR: Cash Balance: Problem 2. You take out a 15-year $235,000 mortgage loan with a rate of 9% APR and monthly payments. In 7 years you decide to pay off the mortgage. What is the principal balance on the loan after 7 years? HINT: The principal balance at any point in time is: 0 Principal Principal balance = PV of all future payments Put your answer here Problem 3. What is the Present Value of a 4 year, $8,000 annuity due if interest rates are 10%? Problem 4. (a) What is the Future Value of a 4 year, $8,000 annuity due if interest rates are 10%? (b) Prove the concept by showing your balance each year if you collect the annuity payments and invest them at 10%. 2 Balance $1,000 3 4

Problem 1. Your borrow 51,000 for 4 vears at 8%. You will repay the loan in 4 equal annual payments. Find the amortization schedule for the Ioan. decide to pay off the mortgage. What is the principal balance on the loan after 7 vears? HINT: The principal balance at any point in time is: Principalbatance,=PVofallfuturepayments 1. Find the payment on the loan 2. Determine how many payments are lett 3. Find the present value of the remaining payments Put your answer here Problem 3. What is the Present Value of a 4 year, $8,000 annuity due if interest rates are 10% ? Problem 4. (a) What is the future Value of a 4 year, $8,000 annuity due if interest rates are 10%

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