1. An investment offers $7,300 per year for 15 years, with the first payment occurring one year from now. If the required return is 5.15 percent, what is the value of the investment? What would the value be if the payments occurred for 40 years? For 75 years? Forever?

2. If you put up $105,000 today in exchange for a 5.375 percent, 15-year annuity, what will the annual cash flow be?

3. One of your customers is delinquent on his accounts payable balance. Youve mutually agreed to a repayment schedule of $1,750 per month. You will charge 1.25 percent per month interest on the overdue balance. If the current balance is $47,000, how long will it take for the account to be paid off?

4. You would like to start saving for your retirement and are trying to figure out how much to save. You estimate that you will need $425,000 per year for the 35 years youll be retired. In addition, youd like to have an additional $60,000 in your fifth year of retirement to buy a boat. Assume that you plan to save an equal amount of money every year, starting next year for the 40 years you will be working (save in years 1-40, withdraw in years 41 -75, buy boat in year 46) How much do you need to save each year if the interest rate is 7%?