1. What is the total amount paid (principal and interest) on a $300,000 15/15 interest only amortizing mortgage ( first 15 yers are interest only and second 15 years are fully amortizing) at 8% if the loan will be fully paid off by the end of the 30th year? Ignore the samll negative remaining balance.
A) $842,630
B) $745,398
C) $887,923
D) $928,346
2. You are buying a house and have both the option and the ability to pay $200,000 cash for it. If you don't pay cash, you will have to pay $225,00 and take out a loan for the full amount with a 30 year term. 5.5% interest rate and monthly payments of $1,277.53. You also believe that you can invest the amount that you would pay in cash for the house in the stock market and recieve an annual interest rate of 8% compounded monthly. The present value of the mortage payments is __________ and you _____ _____pay for the house in cash given your assumptions.
A) $206,737 should
B) $206,737 shouldn't
C) 174,106 shouldn't
D) 174,106 should