1. For a given future value, which of the following statement about the present value is correct?

A. The more frequent compounding can lead to a greater present value.

B. The longer period can lead to a great present value.

C. The higher interest rate can lead to a great present value.

D. None of the above statements is correct.

2. You want to buy a new car 3 years from now, and you plan to save $1,000 per month, beginning today. You will deposit your savings in an account that pays a 3.6% annual interest. How much will you have 3 years from now?

A. $43, 201.80

B. $35,179.30

C. $38, 069.70

D. $27, 338.30

3. Dell computer has two promotions to sell its $3,000 laptop computers. One promotion is the low interest rate loan (the nominal annual interest rate is 1.2% for 2 years, monthly compounding) and the other one is the cash rebate. Two promotions should be indifferent for the buyers. If Smith chose to pay cash at one time and get cash back. How much should he actually pay to buy the computer? If we assume current market rate i = 9%.

A. 3000

B. 2578.54

C. 2688.78

D. 2770.50

4. If Company A offers a similar laptop as Dell computer stated in Question 8, but has a different sales promotion (10% discount for the original sales price $3,000). Which laptop do you prefer to buy?

A. The laptop from Dell

B. The laptop from Company A