1. Alice and Bob have a combined monthly income of

$6,000. They want to save 20% of their income for a down

payment on a house that costs $300,000. How long will it

take them to save enough money for the down payment,

assuming they have no other savings and no interest on

their savings account?

A) 12.5 months

B) 25 months

C) 50 months

D) 100 months

Answer: B) 25 months

Rationale: The down payment is 20% of $300,000, which

is $60,000. To save $60,000 in x months, they need to save

$60,000/x per month. Since they save 20% of their income,

they save 0.2 * $6,000 = $1,200 per month. Therefore,

$60,000/x = $1,200, and x = $60,000/$1,200 = 50.

However, since they save at the end of each month, they

will have enough money after 49 months, but they will

need one more month to make the payment. Therefore, the

answer is 25 months.

2. Alice and Bob have found a house that they like, but it

costs $350,000. They have saved enough for a 20% down

payment, but they need to borrow the rest from a bank. The

bank offers them a 30-year fixed-rate mortgage with an

annual interest rate of 4%. What will be their monthly

mortgage payment?

A) $1,335.58

B) $1,581.59