1. Suppose you deposit $100 today in a savings account at a 10% compound rate for 2 years. How much is the additional amount you can get due to compounding, as compared to a simple interest?

2. An investment will pay you $500 in 9 years. Assume the appropriate discount rate is 8% compounded quarterly. You calculate the present value in two ways. What are the correct numbers for and ? Use the fact that 1.024 = 1.082, 1.042 = 1.081. =500/(1 + %)^9 =500/(1 + %)^36

3.A $1,000 face value bond is currently quoted at 100.8. The bond pays semiannual payments of $22.50 each and matures in six years. What is the coupon rate (APR)?

4.A perpetuity pays $20 on a monthly basis. The first payment will be made a month from now. The interest rate is APR12% (compounded monthly). What is the present value of this perpetuity, using the DCF valuation?