1.)You have two options available when buying a plot of land worth $330,000.

Option 1: You can purchase the land for $330,000 cash.

Option 2: You can make a down payment of 30% of the cash amount now, and pay $90,000 in 1 year, $120,000 in 2 years, and $60,000 in 3 years from now.

If money is worth j1 = 9.25% p.a. in the first year, j12 = 8.75% in the second year, and j4 = 8.5% thereafter, then which option is better for you?

2.) Marion won $50000 in a lottery. She can take cash of $50000 today or $2X every year, beginning 1 year from now for the next 5 years, and $X every month for 2 years, thereafter. If the two options are equivalent and a simple interest rate of 10% p.a., is applied to the first 5 years, and a compound interest rate of 12% p.a. is applied to the remaining 2 years, then:

Determine the amount Marion will be receiving: (i) each year for 5 years, and (ii) each month for the remaining 2 years, using today as your focal date.

3.) Suzan has started university with an initial savings of $5000. She has been awarded 4-year scholarship and will receive $1000 per month, end of each month. She noted that the current market interest rate on loan is 12.5% p.a. compounded yearly. Calculate:

(a) The present value of her scholarship. [

(b) The accumulated value of her scholarship.

Suzan did her monthly budgeting and noted that her month-end rent will be $250, and she can save $300 every month-end. She negotiates a 4-year saving plan with her local banker which agrees to give her annual compound rate of 5% p.a. on her monthly savings and 2.5% p.a. simple interest on her initial savings ($5000).

(c) Calculate Suzan's total savings at the end of 4 years.

Moreover, Suzan's landlord has given her the option to pay a single sum of $11,150 as rent for the entire 4-years or make a month-end payments of $250.

(d) Using the rate of 4% p.a. compounded monthly, determine which option is better?

(e) At what interest rate, j1 will Suzan be indifferent in terms of paying rent or $250 every month end for 4 years or a single amount of $11,150 now?