Joni is in the market for a new house, and she has found a house she likes that is selling for $250,000. The down payment on the house is 20% (the amount that the bank should require you to pay in cash) and Joni plans to finance the remainder with a fixed rate mortgage. The annual rate is 6% and the mortgage is for 15 years, though payments are monthly. What is the interest component of Joni's first monthly payment?

Tom has invested $75,000 in a trust fund at 9% for his child's college education. His child will draw $30,000 per year for four years, starting at the end of year 7. What will be the amount that will be left over in the education fund at the end of year 10 (just after the child has withdrawn the fourth time)?

You have been living in the house you bought 10 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 15-year loan at an annual stated rate of 9%. You have just paid off the 120th monthly payment. Interest rates have meanwhile dropped steadily to 6% per year, and you think it is finally time to refinance the remaining balance. But there is a catch. The fee to refinance your loan is $4,000. Should you refinance the remaining balance? How much would you save/lose if you decided to refinance?

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