1 - Compare the interest earned by $1000 for five years at 8% simple interest with that earned by the same amount five years at 8% compounded annually.

2 - You are considering investing $3000 at an interest rate of 8% compounded annually for five years or investing the $3000 at 9% per year simple interest for five years. Which option is better?

3 - You are about to borrow $10,000 from a bank at an interest rate of 9% compounded annually. You are required to make five equal annual repayments in the amount of $2571 per year, with the first repayment occurring at the end of year 1. Show the interest payment and principal payment each year.

4 - Suppose you have the alternative of receiving either $12,000 at the end of five years or P dollars today. Currently, you have no need for money, so you would de- posit the P dollars in a bank that pays 5% interest. What value of P would make you indifferent in your choice between P dollars today and the promise of $12,000 at the end of five years?

5 - Suppose that you are obtaining a personal loan from your uncle in the amount of $20,000 (now) to be repaid in two years to cover some of your college expenses. If your uncle usually earns 8% interest (annually) on his money, which is invested in various sources, what minimum lump-sum payment two years from now would make your uncle happy?

6 - What will be the amount accumulated by each of these present investments? (a) $5000 in 8 years at 5% compounded annually (b) $2250 in 12 years at 3% compounded annually (c) $8000 in 31 years at 7% compounded annually (d) $25,000 in 7 years at 9% compounded annually

7 - What is the present worth of these future payments? (a) $5500 6 years from now at 10% compounded annually (b) $8000 15 years from now at 6% compounded annually (c) $30,000 5 years from now at 8% compounded annually (d) $15,000 8 years from now at 12% compounded annually

8 - For an interest rate of 13% compounded annually, find (a) How much can be lent now if SI0,000 will be repaid at the end of five years? (b) How much will be required in four years to repay a $25,000 loan received now?

9 - If you desire to withdraw the following amounts over the next five years from a savings account that earns 8% interest compounded annually, how much do you need to deposit now?

N $ Amount

232,000

343,000

446,000

5 28,000

10 - If SI500 is invested now, S1800 two years from now, and $2000 four years from now at an interest rate of 6% compounded annually, what will be the total amount in 15 years?

11 - A local newspaper headline blared, "Shawn Smith Signed for S30 Million." A reading of the article revealed that on April 1, 2009, Shawn Smith, the former record-breaking centre from Hockey University, signed a $30 million package with the Edmonton Ice Knights. The terms of the contract were $3 million immediately, $2.4 million per year for the first five years (with the first payment after one year), and S3 million per year for the next five years (with the first payment at year 6). If Shawn's interest rate is 8% per year, what would his contract be worth at the time he signs it?

12 - How much invested now at 6% would be just sufficient to provide three payments, with the first payment in the amount of S70XX0 occurring two years hence, then S6000 five years hence, and finally S5000 seven years hence?

13 - What is the future worth of a series of equal deposits of S1000 for 10 years in a savings account that earns 7% annual interest if (a) All deposits are made at the end of each year? (b) All deposits are made at the beginning of each year?

14 - What is the future worth of the following series of payments?

(a) $3000 at the end of each year for 5 years at 7% compounded annually

(b) $4000 at the end of each year for 12 years at 8.25% compounded annually

(c) $5000 at the end of each year for 20 years at 9.4% compounded annually

(d) S6000 at the end of each year for 12 years at 10.75% compounded annually