1. Curlys Life Insurance Co. is trying to sell you an investment policy that will pay you and your heirs $27,000 per year forever. A representative for Curlys tells you the policy costs $520,000. At what interest rate would this be a fair deal?

2. Suppose you just bought a 11-year annuity of $16,600 per year at the current investment rate of 14 percent per year.

What is the value of the investment at the current interest rate of 14%?

What is the value of the investment at 9%?

What is the value of the investment at 19%?

3. You want to buy a new sports coupe for $74,700, and the finance office at the dealership has quoted you a loan with an APR of 7.1 percent for 72 months to buy the car.

What will your monthly payments be?

What is the effective annual rate on this loan?

4. Magnus Credit Corp. wants to earn an effective annual return on its consumer loans of 15.75 percent per year. The bank uses daily compounding on its loans. What interest rate is the bank required by law to report to potential borrowers? (Use 365 days in a year)