1.Colin has inherited $6,000 from the death of Grandma Anna. He would like to use this money to buy his mom Hayley a new scooter costing $7,000 2 years from now. Will Colin have enough money to buy the gift if he deposits his money in an account paying 8 percent compounded semi-annually?(4 points)

[Notice: After you show your calculation work, you need to clearly write down whether Colin will have enough money to buy the gift.]

2.A wealthy industrialist wishes to establish a $2,000,000 trust fund which will provide income for his grandchild into perpetuity. He stipulates in the trust agreement that the principal may not be distributed. The grandchild may only receive the interest earned. If the interest rate earned on the trust is expected to be at least 7 percent in all future periods, how much income will the grandchild receive each year?(4 points)

3.Mr. Knowitall has been awarded a bonus for his outstanding work. His employer offers him a choice of a lump-sum of $5,000 today, or an annuity of $1,250 a year for the next five years. Which option should Mr. Knowitall choose if his opportunity cost is 9 percent? (4 points)

[Notice: After you show your calculation work and compare these two options, you need to clearly write down which option Mr. Knowitall should choose.]

4.You received $100 at the beginning of year 1, $200 is received at the beginning of year 2, and $300 is received at the beginning of year 3. If these cash flows are deposited at 12 percent, what is the combined future value of the cash flows at the end of year 3?(4 points)

5.You have provided your friend with a service worth $8,500. Your friend offers you the following cash flow instead of paying $8,500 today. Should you accept his offer if your opportunity cost is 8 percent?(4 points)

[Notice: After you show your calculation work, you need to clearly write down whether you should accept your friend (his) offer.]

6.Jia borrows $50,000 at 10 percent annually compounded interest to be repaid in four equal annual installments. What is the amount of each annual installment payment?(4 points)

7.Xiao Xin is planning to accumulate $40,000 by the end of 5 years by making 5 equal annual deposits. If she plans to make her first deposit today and can earn an annual compound rate of 9 percent on her investment, how much must each deposit be in order to accumulate the $40,000? (4 points)

8.Thelma is planning for her son's college education to begin five years from today. She estimates the yearly tuition, books, and living expenses to be $5,000 per year for a four-year degree. How much must Thelma deposit today, at an interest rate of 8 percent, for her son to be able to withdraw $5,000 per year for four years of college?(4 points)

9.Rita borrows $4,500 from the bank at 9 percent annually compounded interest to be repaid in three equal annual installments. The interest paid in the third year is ________.(4 points)

10.Marc has purchased a new car for $15,000. He paid $2,500 as down payment and he paid the balance by a loan from his hometown bank. The loan is to be paid on a monthly basis for two years charging 12 percent interest. How much are the monthly payments?(4 points)