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1. Suppose you win a lottery that entitles you to receive $800 per month for the next 30 years. If money is worth 6% compounded monthly, what is the present value of this annuity?

   1.   ?    $133,433.29
   2.   ?    $963,612.03
   3.   ?    $22,235.24
   4.   ?    None of the answers given; click to see the solution.

2. In order to buy a new house, a family obtains a mortgage of $220,000 for 30 years at 6.9% compounded monthly. What are the monthly payments?

   1.   ?    $1448.92
   2.   ?    $8005.02
   3.   ?    $15,180
   4.   ?    None of the answers given; click to see the solution.

3. If the monthly payment on a home mortgage of $300,000 made at 9% compounded monthly is $2699.18 for 20 years, how much interest is paid over the life of the loan?

   1.   ?    $347,803.20
   2.   ?    $246,016.40
   3.   ?    $540,000
   4.   ?    None of the answers given; click to see the solution.

4. A loan of $5000 is being paid off in equal quarterly payments for 3 years. If the interest rate is 12% compounded quarterly, find the amount of each quarterly payment.

   1.   ?    $502.31
   2.   ?    $2081.74
   3.   ?    $352.31
   4.   ?    None of the answers given; click to see the solution.

5. A credit card balance of $10,000 is being paid off with monthly payments of $500. The interest rate is 1.5% per month. What is the unpaid balance after the first monthly payment is made?

   1.   ?    $9650
   2.   ?    $9500
   3.   ?    $9507.50
   4.   ?    None of the answers given; click to see the solution.