1. You are offered a T-note that pays $1,000 in 9 months (or 270 days) for $910. You have $910 in a bank that pays a 5% nominal rate, with 365 daily compounding. You plan to leave the money in the bank if you dont buy the risk-free T-note. Which investment should you choose? Use the following all three solution methods to verify your answer. 1. Greatest future wealth: FV 2. Greatest wealth today: PV 3. Highest effective rate of return.

2. You want to purchase a house: your maximum monthly payment is $1,600, and you also have a saving of $35,000 as the down payment. You apply for a 30-year fixed mortgage loan with APR 4.49%. What is the maximum house price you can afford to buy?