1. A bookstore offers you the following deal: you pay $36 today (in January) and you get 5%

off the price of everything you purchase in December (for simplicity assume exactly 12

months from now). If your savings account earns 4.03% APR (compounded monthly), how

much do you have to buy in December to just break even on the offer?

2.

You expect that you will need to replace your furnace in 3 years at a cost of $16,944. How

much must you save, each month for 19 months, starting next month (the same amount

each month) if your savings account pays 2.05% APR (compounded monthly)?