a) At the beginning of year 1 you can invest € 5,000. If the interest rate is 8 % per annum, how much will you get at the end of year 6?

b) Suppose in three years you would need the sum of € 250,000 to buy land. Money could be left on deposit at an interest rate of 7 %. How much do you have to invest today?

c) What is the better alternative if the interest rate is 5 %: Getting € 2,500 at the beginning of year 1 or getting € 3,000 at the end of year 4?

d) You could receive € 1,000, then € 2,000 and finally € 3,000 at the end of each of the following 3 years as preliminary payments on your inheritance from your grandfather. You as well as your grandfather could reinvest these payments on the capital market at 8 %.

What amount would your grandfather offer alternatively now?

e) A modification of subtask d above could be: You will receive € 25,000 over the next five years, to be paid out at the end of each year as a preliminary payment on your inheritance.

What would this be equal to in “today’s” amount if the capital market interest rate is assumed to be 7 %?