1. What is the annual payment that must be made if you would like to save $50,000 at the end of year 6? Assume that you are making these payments at the beginning of the year, and you start with a lumpsum of $3,000. The annual market interest rate is 4.5%. 2. Today you purchased a bond at a price of $864. This is a semi-annual bond which has an annual coupon rate of 8% for the next 8 years after which the bond matures. Find the prevailing market annual interest rate. 3. You recently got promoted at your job. You have since decided to buy your dream car which costs $97,000 today. The car dealer gives you two choices a) pay the money upfront and take possession of the car - if you do so, you get a 5% discount on the purchase price b) pay $38,999 at the end of every year for the next 3 years. If the prevailing annual market interest rate is 12%, as a rational investor, what choice will you make? - a a a 4. As a rational investor, you have just purchased a bond from a broker for $990. The bond has 6 years to maturity and a 12.1% coupon rate. What can you comment about the price you paid for the bond? Later, you received a call from the same broker who advised you that the bond was a semi-annual coupon bond instead of an annual coupon bond which you thought you purchased. Did you make a good purchase? (Assume that the annual market interest rate is 12.4% per annum)