1 An investment promises to pay you $6,000 per year forever with the first payment in 7 years. If alternative investments of similar risk earn 3% per year, determine the maximum you would be willing to pay for this investment.

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2 You are planning for your retirement in 30 years. At that time you want to have saved $8,500,000. How much do you need to save each quarter for the next 30 years if the interest rate on your investment will be 7% per year (APR)?

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3 Suppose you take a 5 year loan of $20,000 with an interest rate of 7% and annual payments starting at the end of year 1. What are the annual loan payments?

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4877.81

The loan payments are $4877.81 per year. Suppose you decide to pay off the loan at time 4. How much would you have to pay (including the time 4 payment), assuming there are no penalties for early repayment?

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