1. If you deposit $1,000 each year, starting today, in an account that pays 10% interest per year, compounded annually, what will be the balance in the account after you have made ten payments, assuming you make no withdrawals from the account?

2. If you deposit $1 per month in an account that pays 12% interest, compounded monthly, what will be the balance in the account after two years if you make no withdrawals?

3. If you deposit $100 in an account each quarter for two years, beginning next quarter, what will be the balance in the account at the end of two years if interest is 12%, compounded quarterly if you make no withdrawals?

4. The Milken Company is offering you an investment that promises you $1,000 at the end of ten years if you invest $500 today. What is the annual return on this investment?

5. In 1970, Jack-in-the-Box hamburger cost 24. In 2000, a Jack-in-the-Box hamburger cost 79. What is the effective annual increase in the price of a Jack-in-the-Box hamburger from 1970 to 2000?

6. Suppose an investor wants to have $10 million to retire 45 years from now. How much would she have to invest today with an annual rate of return equal to 15 percent?

7. You are considering borrowing $10,000 for 3 years at an annual interest rate of 6%. The loan agreement calls for 3 equal payments, to be paid at the end of each of the next 3 years. (Payments include both principal and interest.) The annual payment that will fully pay off (amortize) the loan is closest to:

8. You want to buy an ordinary annuity that will pay you $4,000 a year for the next 20 years. You expect annual interest rates will be 8 percent over that time period. The maximum price you would be willing to pay for the annuity is closest to

9. Maggie deposits $10,000 today and is promised a return of $17,000 in eight years. What is the implied annual rate of return?

10. To triple $1 million, Mika invested today at an annual rate of return of 9 percent. How long will it take Mika to achieve her goal?

11. Jane plans to invest an equal amount of $2,000 in an equity fund every year end beginning this year. The expected annual return on the fund is 14 percent. She plans to invest for 20 years. How much could she expect to have at the end of 20 years? What if she funds the account at the beginning of each year?

12. You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning 1 year from today. You plan to deposit the funds in a mutual fund that you expect to return 8% per year. Under these conditions, how much will you have just after you make the fifth deposit, 5 years from now? What if bank offers quarterly compounding?