1. Quantitative Problem: You need $11,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 6 years, with the first payment to be made one year from today. He requires a 9% annual return.

What will be your annual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent.

$

How much of your first payment will be applied to interest and to principal repayment? Do not round intermediate calculations. Round your answers to the nearest cent.

Interest: $

Principal repayment: $

2. Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.1 million, or to receive 30 end-of-year payments of $5.3 million.

If she thinks she can earn 7% percent annually, which should she choose?

If she expects to earn 8% annually, which is the best choice?

If she expects to earn 9% annually, which option would you recommend?

Explain how interest rates influence her choice.