1.) You are the parent of a 4-year-old girl and plan to being saving next year on her 5th birthday (on September 2, 2008) for her college education. You wish to provide $15000 per year for 4 years beginning when she is 18. How much money in 13 equal annual installments must be invested each year until she is 17 (September 2, 2020) to meet this goal if you earn 9% on your investment?

2. Mark Smith wants to save money to meet two objectives. First, he would like to be able to retire 20 years from now and have a retirement income of $30000 per year for at least 30 years. Second, he would like to purchase a fishing boat 5 years from now at an estimated cost of $20000. He can afford to save only $6000 per year for the first 10 years. Mark expects to earn 8% per year on average from investments over the next 50 years. What must his minimum annual saving be from years 11 through 20 to meet his objectives?

3. One year ago you borrowed $10000 at an annual interest rate of 12% (1% per month) to be repaid in 36 monthly installments of $332.14 each. You have made 12 payments on the loan.

a. What is the current balance remaining on the loan? (Hint: What is the relationship between the present value of the remaining payments to be made on the loan and its current balance?)

b. What will be the balance owed on the loan one year from now if all payments are made as scheduled?

c. What is the dollar amount of interest to be paid on the loan in the coming year? (Hint: The answers to a and b are very useful in answering c.)