1.

You decide to begin saving towards the purchase of a new car in 5 years

. If you put $1,000 at

the end of each of the next 5 years in a savings account paying 6% compounded annually,

how much will you accumulate after 5 years?

2.

James Smith has a 4

-

year ordinary annuity that pays $1,000 per year

and has an interest rate

of 6%.

a.

C

alculate the future value of this ordinary annuity.

b.

Assuming this was an annuity due, calculate the future value of this annuity.

3.

You have contacted a number of car dealerships to determine the best interest rate on a new

automobile loan. A Ford dealershi

p has quoted you a 5

-

year, 10% loan in the amount of

$35,000 that will require monthly payments.

a.

What is the monthly loan payment?

b.

What will be the loan