(1). At the beginning of the day, Miss Manners bought a used BMW car at $11,000. She paid a tax of 5% at the time of purchase. It would cost her about $110 per month and $50/bi-weekly to maintain and run (fuel cost) the car. The rate of interest is 5% per annum. Use the above information to answer the following questions:

(a) How much would it cost her in todays money to own and operate the car for 5 years (her college life)?

(b) Due to the excessive snow, Miss Manners would buy a set of 4 new tires at a cost of $500 two years from now. If Miss Manners decides to sell the car for $4200 at the end of 5 years, how much would it cost her to own and operate the car over the five years (in todays money)?

(c)What is the future value equivalent of (b) at the end of five years?

(2). Use an interest rate equal to 6% compounded annually to solve this problem.

a. If $20,000 is borrowed for 5 yr, what total amount must be paid back?

b. How much of the total amount repaid represents interest?

(3). A contractor is saving to purchase a $200,000 machine. How much will the company have to bank today if the interest rate is 10% and they would like to purchase the machine in 4 yr?