1. Bryant Investing is putting out a new product. The product will pay out $32,000 in the first year, and after that the payouts will grow by an annual rate of 2.75 percent forever. If you can invest the csh flow at 7.25 percent how much will you be willing to pay for this perpetuity?
2. E-Loan, an online lending sence, recently offered 60-month auto loans at 4.2% compounded monthly to applicants with good credit ratings. If you have a good credit rating and can afford monthly payments of $260, how much can you borrow from E-Loan? What is the total interest you will pay for this loan?