1)

Mitch is saving his money and earning 3% per year.He tells his niece that she will receive annual payments of $11,000 per year for 10 years, when he dies. Mitc lives another 3 years and dies in 2019.

a) What is thepresentvalue of this inheritance 2016?

b) Total value of this inheritance in 2019: ?

c) Total value of this inheritance in 2016: ?

2)

Andy would like to buy his first condo in five years. He thinks he will need a down payment of $20,000.

How much money does he needs to invest today, earning 6% per year, to have enough for the down payment?

3)

Sarah has two savings options at Wells Fargo Bank:simple interest at 5% per year, and compound interest at 5% per year. Her parents opened a bank account with a $2,000 deposit for her the day she was born.

a) The day she turned 18, how much extra money was earned because of the compound interest?

b) Total simple interest earned over 18 years ?

c) Total compoundinterestearned over 18 years?

d) Difference (in favor of compounding)?