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Chapter 8: Problem 13
In Exercises 11-20, express each decimal as a percent. \(0.3844\)
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Describe what happens to the portions of payments going to principal and interest over the life of an installment loan.
Make Sense? In Exercises 23-26, determine whether each statement makes sense or does not make sense, and explain your reasoning. There must be an error in the loan amortization schedule for my mortgage because the annual interest rate is only \(3.5 \%\), yet the schedule shows that I'm paying more on interest than on the principal for many of my payments.
If an investor sees that the return from dividends for a stock is lower than the return for a no-risk bank account, should the stock be sold and the money placed in the bank account? Explain your answer.
The price of a small cabin is \(\$ 100,000\). The bank requires a \(5 \%\) down payment. The buyer is offered two mortgage options: 20 -year fixed at \(8 \%\) or 30 -year fixed at \(8 \%\). Calculate the amount of interest paid for each option. How much does the buyer save in interest with the 20-year option?
In Exercises 25-30, round to the nearest dollar. Suppose that you earned a bachelor's degree and now you're teaching high school. The school district offers teachers the opportunity to take a year off to earn a master's degree. To achieve this goal, you deposit \(\$ 2000\) at the end of each year in an annuity that pays \(7.5 \%\) compounded annually. a. How much will you have saved at the end of 5 years? b. Find the interest.
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