1. Future Value Compute the future value in year 9 of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 using a 10 percent interest rate.
2. Future Value of an Annuity What is the future value of a $900 annuity payment over five years if interest rates are 8 percent?
3. Present Value Compute the present value of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 if interest rates are 10 percent.
4. Present Value of an Annuity Whatâ€™s the present value of a $900 annuity payment over five years if interest rates are 8 percent?
5. Present Value of an Annuity Due If the present value of an ordinary, 6-year annuity is $8,500 and interest rates are 9.5 percent, whatâ€™s the present value of the same annuity due?
6. Effective Annual Rate A loan is offered with monthly payments and a 10 percent APR. Whatâ€™s the loanâ€™s effective annual rate (EAR)?
7. Loan Payments You wish to buy a $25,000 car. The dealer offers you a 4-year loan with a 9 percent APR. What are the monthly payments? How would the payment differ if you paid interest only? What would the consequences of such a decision be?