1. Calculate the future value of $4,600 received today if it is deposited at 9 percent for three years. Answer: FV-$5,957 2. Calculate the present value of $89,000 to be received in 15 years, assuming an opportunity cost of 14 percent Answer: PV - $12,469 3. Colin has inherited $6,000 from the death of Grandma Anna. He would like to use this money to buy his mom Hayley a new scooter costing $7,000, two years from now. Will Colin have enough money to buy the gift if he deposits his money in an account paying 8 percent compounded semiannually? Answer: FV = $7,019 4. Dan and Jia are newlyweds and have just purchased a condominium for $70,000. Since the condo is very small, they hope to move into a single-family house in 5 years. How much will their condo worth in 5 years if inflation is expected to be 8 percent? Answer: FV = $102,853. 5. Calculate the present value of a $10,000 perpetuity at a 6 percent discount rate. Answer: PV = $166,667 6. Calculate the future value of an annuity of $5,000 each year for eight years, deposited at 6 percent Answer: FV - $49,487.34 7. Calculate the present value of an annuity of $3,900 each year for four years, assuming an opportunity cost of 10 percent. Answer: PV - $12,363 8. Dottie has decided to set up an account that will pay her granddaughter (Lexi) S5,000 a year indefinitely. How much should Dottie deposit in an account paying 8 percent annual interest? Answer: PV - 562,500 9. A wealthy industrialist wishes to establish a $2,000,000 trust fund which will provide income for his grandchild into perpetuity. He stipulates in the trust agreement that the principal may not be distributed. The grandchild may only receive the interest earned. If the interest rate earned on the trust is expected to be at least 7 percent in all future periods, how much income will the grandchild receive each year? Answer: $140,000 10. Nico establishes a seven-year, 8 percent loan with a bank requiring annual end-of-year payments of $960.43. Calculate the original principal amount Answer: PVA = $5,000