12 Value a perpetuity that pays 2,700 starting in October 2024. Long term rates are 8.3%. The two-year interest rate is 7.8%. (3) 13 Credit Suisse has a bond which matures in three years with a coupon of 3.5%. The required rate of return on Credit Suisses three-debt is 4.25%. What is the price of the bond? (5)

14 Establish the cash-flows for an investment of USD 130,000 nominal of a three-year bond with a 5.5% coupon. If the borrowers required rate of return is 7.5%, what would you expect the price of the bond to be? (5)

15 Value a perpetuity of $7,000 p.a. starting in three years and growing at 2%. Interest rates are flat at 4%. (4)

16 You wish to set up a regular savings plan for your retirement in 20 years time. Interest rates are currently 5% with long term inflation at 2%.You believe that interest rates will be at 4% in 2040. You wish to have an annual income of $70,000 in todays money from the pension and this should last for 15 years, growing at 1% each year. How much do you need to invest each year? (6)

17 You will save $200 a month this year and increase this by 0.2% each month for the next 10 years. How much will you have at the end of the saving period if interest rates are 4.75%? (4)

18 You will save 900.00 this year and increase this by 2% each year for the next 12 years. How much will you have at the end of the saving period if interest rates are 8%? What annuity would this give you in 13 years if interest rates are then 6% and the income should last for 10 years? (5)

19 You aim to buy a new car in five years time. The car will cost you $35,000. Interest rates are 4.5%. How much should you save a month in order to have the right amount of money available? (3)

20 You are going to borrow CHF 220,000 for twelve years at 4.7% to finance a house extension. What is the quarterly amount you need to pay to repay the loan over 12 years? (4)