1 - lOn September 1, 1998, Susan Chao bought a motorcycle for $10,000. She paid $1,000 down and financed the balance with a five-year loan at a stated annual interest rate of 9.6 percent, compounded monthly. She started the monthly payment exactly one month after the purchase, i.e., October, 1998. In the middle of October, 2000, she got a new job and decided to pay off the loan. If the bank charges her 1 percent prepayment penalty based on the loan balance, how much should she pay the bank on November 1, 2000?

2 - lA 10-year annuity pays $900 per year, with payments made at the end of each year. The first $900 will be paid 5 years from now. If the APR is 8% and interest is compounded quarterly, what is the present value of this annuity?

3 - Mark Weinstein has been working on an advanced technology in laser eye surgery. The technology is expected to be available to the medical industry two years from today and will generate annual income of $200,000 growing at 5 percent perpetually. What is the present value of the technology if the discount rate is 10 percent?