1. An insurance company offers you an end of year annuity of $35,000 per year for the next 5 years. They claim your return on the annuity is 8 percent. What should you be willing to pay today for this annuity?
2. You borrow $149,000 to buy a house. The mortgage rate is 4.0% and the loan period is 15 years. Payments are made monthly. If you pay for the house according to the loan agreement, how much total interest will you pay?