1. A home improvement sales representative is offering you a great deal on window replacement. He says, For only three annual end-of-the year payments of $6,700, you can replace all your windows now. If you can borrow money a 4.5% to finance the project, what is the price of window replacement project today? If you are to make the payment at the beginning of the year, what is the price of the window replacement project today?

2. Eric, age 18, wants to be able to travel to Europe for 2 months when he turns 22. The trip costs $10,000 today, and its cost is expected to increase 2 percent annually. Eric wants to make one deposit today into an account paying 5.6 percent annually in order to go on the trip in 4 years. How much will Erics trip cost, and how much does Eric have to save today in order to travel to Europe for 2 months?

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