10. An interest is stated as 24% APR compounded monthly. Find the following effective interest rates: (a) Effective monthly rate, (b) effective quarterly rate, and (c) effective annual rate. 11. An investment offers nothing in months 1-3, then $650 every month from month 4 to month 10. The interest rate available to you is 16% per year (i.e., APR-16%) and interest is compounded quarterly. (a) Draw a timeline for these cash flows. (b) Compute the relevant effective interest rate for your cash flow analysis. (e) How much are you willing to pay for the investment today. 12. Calculating Rates of Return You're trying to choose between two different investments, both of which have up-front costs of $75,000. Investment G returns $125.000 in six years. Investment H returns $185,000 in 10 years. Which of these investments has the higher return? Which investment would you choose? Fv=pv (I+Y 13. Growing Annuity Your job pays you only once a year for all the work you did over the previous 12 months. Today, December 31, you just received your salary of $72,500, and you plan to spend all of it. However, you want to start saving for retirement beginning next year. You have decided that one year from today you will begin depositing 5 percent of your annual salary in an account that will earn 9 percent per year. Your salary will increase at 3.7 percent per year throughout your career. How much money will you have on the date of your retirement 40 years from today? [Hint: Try to draw a timeline. 1)What will be your salary at year 1 if you just received your salary of $72,500 (at time 1-0? 2) How much are you saving in year 1? 3) You may want to compute PV of annuity first using the growing annuity formula and then try to compute FV using lump sum formula.]