4. Emerson Cammack wishes to purchase an annuity contract that will pay him $7,000 a year for the rest of his life. The Philo Life Insurance Company figures that his life expectancy is 20 years, based on its actuary tables. The company imputes a compound annual interest rate of 6 percent in its annuity contracts.

a. How much will Cammack have to pay for the annuity?

b. How much would he have to pay if the interest rate were 8 percent?

5. What's the future value of a 7%, 5-year ordinary annuity that pays $300 each year?

6 . Establish loan amortization schedules for the following loans

a. A 5 year loan of $3,000 with equal installment payments at the end of each year. The interest rate is 5 percent per year.

b. A 6-year mortgage loan of $10,000 at a 10 percent compound annual interest rate with equal installment payments at the end of each year.