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14. For each of these scenarios, indicate which direction the variable goes: a. If interest rate goes up and you have a set monthly budget for mortgage payments, you can afford a bigger/smaller house b. You found your dream home. If interest rate goes up, your monthly payment goes up/down. c. If interest rate goes up, the money you have in your savings account will be worth more/less in the future. d. If interest rate goes up, you'd have to save more/less per month in order to buy a car worth $20,000 in 3 years. e. If interest rate goes up, you'll be able to withdraw more/less money per month for a fixed number of months. f. You gave $100,000 to the university for scholarships. If interest rate goes up, the university would be able to offer more/less scholarship. g. You have a fixed monthly dollar amount that you'd like to use in your retirement 45 years from now. If interest rate goes up, you will have to save more/less per month today. h. Joe has saved $1 million and decides to retire today. He is be more certain that he has enough to spend in his retirement if interest rate goes up/down. i. You win $5 million in lottery today, and the lottery commission is offering you $250K every year for 20 years or a $3 million lump sum today. You are more/less likely to take the lump sum if market interest rates go up. j. If the cost of an annuity just went up, that means the interest rate must have gone up/down.

14. For each of these scenarios, indicate which direction the variable goes: a. If interest rate goes up and you have a set monthly budget for mortgage payments, you can afford a bigger/smaller house b. You found your dream home. If interest rate goes up, your monthly payment goes up/down. c. If interest rate goes up, the money you have in your savings account will be worth more/less in the future. d. If interest rate goes up, you'd have to save more/less per month in order to buy a car worth $20,000 in 3 years. e. If interest rate goes up, you'll be able to withdraw more/less money per month for a fixed number of months. f. You gave $100,000 to the university for scholarships. If interest rate goes up, the university would be able to offer more/less scholarship. g. You have a fixed monthly dollar amount that you'd like to use in your retirement 45 years from now. If interest rate goes up, you will have to save more/less per month today. h. Joe has saved $1 million and decides to retire today. He is be more certain that he has enough to spend in his retirement if interest rate goes up/down. i. You win $5 million in lottery today, and the lottery commission is offering you $250K every year for 20 years or a $3 million lump sum today. You are more/less likely to take the lump sum if market interest rates go up. j. If the cost of an annuity just went up, that means the interest rate must have gone up/down.

Algebra and Trigonometry (6th Edition)
Algebra and Trigonometry (6th Edition)
6th Edition
ISBN:9780134463216
Author:Robert F. Blitzer
Publisher:Robert F. Blitzer
ChapterP: Prerequisites: Fundamental Concepts Of Algebra
Section: Chapter Questions
Problem 1MCCP: In Exercises 1-25, simplify the given expression or perform the indicated operation (and simplify,...
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Please answer the rest of 14 and 15. Thanks
14. For each of these scenarios, indicate which direction the variable goes: a. If interest rate goes up and you have a set monthly budget for mortgage payments, you can afford a bigger/smaller house b. You found your dream home. If interest rate goes up, your monthly payment goes up/down. C. If interest rate goes up, the money you have in your savings account will be worth more/less in the future. d. If interest rate goes up, you'd have to save more/less per month in order to buy a car worth $20,000 in 3 years. e. If interest rate goes up, you'll be able to withdraw more/less money per month for a fixed number of months. f. You gave $100,000 to the university for scholarships. If interest rate goes up, the university would be able to offer more/less scholarship. g. You have a fixed monthly dollar amount that you'd like to use in your retirement 45 years from now. If interest rate goes up, you will have to save more/less per month today. h. Joe has saved $1 million and decides to retire today. He is be more certain that enough to spend in his retirement if interest rate goes up/down. You win $5 million in lottery today, and the lottery commission is offering you $250K every year for 20 years or a $3 million lump sum today. You are more/less likely to take the lump sum if market interest rates go up. j. If the cost of an annuity just went up, that means the interest rate must have gone up/down. i. 15. Mark True or False for the following: T/F T/F T/F T/F T/F has a. If a borrower pays twice as much as the required payments every period, she can pay off the load in half the time. b. If the interest rate drops by 50%, the monthly payments of a mortgage would drop by 50%. c. Compared to the nominal rate, the EAR is a better measure of true cost of borrowing. d. The cost of an annuity due is always higher than the cost of an ordinary annuity assuming that the cash flow amount, the number of periods, and the interest rate is the same. e. The dollar amount of interest paid per month on a mortgage is the same because the interest rate is fixed.
Transcribed Image Text:14. For each of these scenarios, indicate which direction the variable goes: a. If interest rate goes up and you have a set monthly budget for mortgage payments, you can afford a bigger/smaller house b. You found your dream home. If interest rate goes up, your monthly payment goes up/down. C. If interest rate goes up, the money you have in your savings account will be worth more/less in the future. d. If interest rate goes up, you'd have to save more/less per month in order to buy a car worth $20,000 in 3 years. e. If interest rate goes up, you'll be able to withdraw more/less money per month for a fixed number of months. f. You gave $100,000 to the university for scholarships. If interest rate goes up, the university would be able to offer more/less scholarship. g. You have a fixed monthly dollar amount that you'd like to use in your retirement 45 years from now. If interest rate goes up, you will have to save more/less per month today. h. Joe has saved $1 million and decides to retire today. He is be more certain that enough to spend in his retirement if interest rate goes up/down. You win $5 million in lottery today, and the lottery commission is offering you $250K every year for 20 years or a $3 million lump sum today. You are more/less likely to take the lump sum if market interest rates go up. j. If the cost of an annuity just went up, that means the interest rate must have gone up/down. i. 15. Mark True or False for the following: T/F T/F T/F T/F T/F has a. If a borrower pays twice as much as the required payments every period, she can pay off the load in half the time. b. If the interest rate drops by 50%, the monthly payments of a mortgage would drop by 50%. c. Compared to the nominal rate, the EAR is a better measure of true cost of borrowing. d. The cost of an annuity due is always higher than the cost of an ordinary annuity assuming that the cash flow amount, the number of periods, and the interest rate is the same. e. The dollar amount of interest paid per month on a mortgage is the same because the interest rate is fixed.
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