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Chapter 8: Problem 9
In Exercises 1-10, express each fraction as a percent. \(\frac{9}{80}\)
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The price of a home is $$ 160,000\(. The bank requires a \)15 \%\( down payment. The buyer is offered two mortgage options: 15 -year fixed at \)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 15 -year option?
You would like to have \(\$ 4000\) in four years for a special vacation following college graduation by making deposits at the end of every six months in an annuity that pays \(7 \%\) compounded semiannually. a. How much should you deposit at the end of every six months? b. How much of the \(\$ 4000\) comes from deposits and how much comes from interest?
Describe one advantage and one disadvantage of an adjustable-rate mortage over a fixed-rate mortgage.
Exercises 3-4 involve credit cards that calculate interest using the average daily balance method. The monthly interest rate is \(1.2 \%\) of the average daily balance. Each exercise shows transactions that occurred during the June 1-June 30 billing period. In each exercise, a. Find the average daily balance for the billing period. Round to the nearest cent. b. Find the interest to be paid on July 1 , the next billing date. Round to the nearest cent. c. Find the balance due on July 1 . d. This credit card requires a \(\$ 30\) minimum monthly payment if the balance due at the end of the billing period is less than \(\$ 400\). Otherwise, the minimum monthly payment is \(\frac{1}{25}\) of the balance due at the end of the billing period, rounded up to the nearest whole dollar. What is the minimum monthly payment due by July 9? $$ \begin{array}{|l|c|} \hline \text { Transaction Description } & \text { Transaction Amount } \\ \hline \text { Previous balance, } \$ 4037.93 & \\ \hline \text { June } 1 \quad \text { Billing date } & \\ \hline \text { June } 5 \quad \text { Payment } & \$ 350.00 \text { credit } \\\ \hline \text { June } 10 \text { Charge: Gas } & \$ 31.17 \\ \hline \text { June } 15 \text { Charge: Prescriptions } & \$ 42.50 \\ \hline \text { June } 22 \text { Charge: Gas } & \$ 43.86 \\ \hline \text { Charge: Groceries } & \$ 112.91 \\ \hline \text { June } 29 \text { Charge: Clothing } & \$ 96.73 \\ \hline \text { June } 30 \text { End of billing period } & \\ \hline \text { Payment Due Date: July } 9 & \\ \hline \end{array} $$
In Exercises 11-18, a. Determine the periodic deposit. Round up to the nearest dollar. b. How much of the financial goal comes from deposits and how much comes from interest? $$ \begin{array}{|l|l|l|l|} \hline \$ \text { ? at the end of each month } & 7.25 \% \text { compounded monthly } & 40 \text { years } & \$ 1,000,000 \\ \hline \end{array} $$
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