1.A 7 year note has a payment of $5,000 at the end of each year for seven years. What is the effective interest rate on the loan if the present principal of the note is $25,000.

2. A project is expected to earn $300, $600, and $800 for the next three years. What is the present value of these cash flows at a 5 percent discount rate?

3. Exactly 20 years from now Mr. J. R Smith will start receiving a pension of $40,000 per year. The pension payment will continue for 10 years after retirement. How much is the pension worth now if the money is worth 6 percent per year?

4. Dan is the winner of a $1 million state lottery. He is given the choice between $30,000 s year for 20 years and $650,000 in cash. The annuity payment starts today. If the interest rate is 6 percent, which would Dan prefer?

5. Charles Featherstun purchased 100 acres of land for $300,000 in 2000. If he sells the land for $1.1 million in 2020, what rate of return will he have earned on his investment?