1. Assume you work for an employer who will contribute $300 a month for the next 15 years into a retirement plan for your benefit. At an interest rate of 8 percent per year (APR), what is this employee benefit worth to you today?

2. The total cost of a college education will be $225,000 when your child enters college in 15 years. Assuming you can earn 6 percent on your investment, answer the following questions:

a. How much you should invest annually to cover the cost of your child's college education in 15 years?

b. Now, consider that the first investment will be made immediately (Time 0). What's the new annual investment?

3. Chase Bank has a preferred stock that pays $ 5.00 per year in perpetuity.

a. Assuming a required return of 5 percent per year , what is the price of the preferred stock now?

b. What will be the price of the preferred stock if the interest rate abruptly increases and the new required return rises to 7 percent?

4. Your credit card charges you 1.00% interest per month. Whats the Annual Percentage Rate (APR) and Effective Annual Rate (EAR) per year.