26. Assume that the expected inflation rate for the next 10 years is 8.4% per year. If the current price of a gallon of gas in Atlanta is $3.15 per gallon, and if the price of gasoline increases at 8.4% per year for the next 12 years, what is the projected price of a gallon of gasoline exactly 12 years from today (i.e., in 2035)? 27. What is the present value of the following cash flow stream at a rate of 10.275%? Year 0 1 2 3 $0 $300 4 28. What is the effective annual rate (EAR) of 7.18% p.a., but with daily compounding (assume 365 days per year)? Round your answer to 2 decimal places (for example, record 0.1283684 as 12.84). Cash Flow $75 $200 $225 29. You expect to deposit the following cash flows at the end of years 1 through 5, $1,000; $4,000; $5,000; $9,000; and $2,000 respectively. What is the future account value at the end of year 6 if you can earn 10% compounded quarterly? 30. Justin won a contest at a local business that paid him a lump sum of $5,000. Justin, who just turned 22 years of age, has decided to invest his $5,000 for 45 years until he retires. During this time Justin believes that his account will earn 13% every year, compounded annually. As soon as he retires (exactly 45 years from today) Justin will start withdrawing retirement funds every year for an additional 33 years, but he plans to invest more conservatively at 8% compounded annually during retirement. How much can Justin withdraw each year in retirement? 31. You just graduated and you decided to purchase a new sports car to enjoy your newfound freedom. Your local credit union will provide financing for 72 months at an 18.8 percent annual rate, compounded monthly. The drive-out price of the car you are buying is $37,500. You must make a 10% down payment (i.e., you must pay the dealer $3,750 immediately) and then you will finance the remaining 90 percent of the purchase price with your credit union (i.e., with a 72-month loan at a rate of 18.8 percent p.a., compounded monthly). If your first payment is due exactly one month from today, what will be your required monthly payment? 32. Exactly five years from today, Prisha would like to buy a new living room set (couch, chairs, tables and lamps) with cash. Prisha currently has $750 saved in an investment account that pays interest of 4.52% p.a., but with monthly compounding. If Prisha deposits an additional $35 per month (with the first deposit made one month from today) into the account, what is the maximum amount that Prisha will be able to pay for her entertainment system exactly 5 years from today? 33. What is the future value exactly twelve years after the last deposit of 65 annual deposits of $2,800 per year (first deposit to be made today) given an interest rate of 8.8% p.a.?

26. Assume that the expected inflation rate for the next 10 years is 8.4% per year. If the current price of a gallon of gas in Atlanta is $3.15 per gallon, and if the price of gasoline increases at 8.4% per year for the next 12 years, what is the projected price of a gallon of gasoline exactly 12 years from today (i.e., in 2035)? 27. What is the present value of the following cash flow stream at a rate of 10.275% ? 28. What is the effective annual rate (EAR) of 7.18% p.a., but with daily compounding (assume 365 days per year)? Round your answer to 2 decimal places (for example, record 0.1283684 as 12.84 ). 29. You expect to deposit the following cash flows at the end of years 1 through 5,$1,000;$4,000;$5,000; $9,000; and $2,000 respectively. What is the future account value at the end of year 6 if you can earn 10% compounded quarterly? 30. Justin won a contest at a local business that paid him a lump sum of $5,000. Justin, who just turned 22 years of age, has decided to invest his $5,000 for 45 years until he retires. During this time Justin believes that his account will earn 13% every year, compounded annually. As soon as he retires (exactly 45 years from today) Justin will start withdrawing retirement funds every year for an additional 33 years, but he plans to invest more conservatively at 8% compounded annually during retirement. How much can Justin withdraw each year in retirement? 31. You just graduated and you decided to purchase a new sports car to enjoy your newfound freedom. Your local credit union will provide financing for 72 months at an 18.8 percent annual rate, compounded monthly. The drive-out price of the car you are buying is $37,500. You must make a 10% down payment (i.e., you must pay the dealer $3,750 immediately) and then you will finance the remaining 90 percent of the purchase price with your credit union (i.e., with a 72 -month loan at a rate of 18.8 percent p.a., compounded monthly). If your first payment is due exactly one month from today, what will be your required monthly payment? 32. Exactly five years from today, Prisha would like to buy a new living room set (couch, chairs, tables and lamps) with cash. Prisha currently has $750 saved in an investment account that pays interest of 4.52% p.a., but with monthly compounding. If Prisha deposits an additional $35 per month (with the first deposit made one month from today) into the account, what is the maximum amount that Prisha will be able to pay for her entertainment system exactly 5 years from today? 33. What is the future value exactly twelve years after the last deposit of 65 annual deposits of $2,800 per year (first deposit to be made today) given an interest rate of 8.8% p.a