5. (Loans) A bank is offering you a loan of $10,000 for 10 years. The stated interest rate (APR) is 6%.

a. If this is an amortized loan with monthly payment, how much is your fixed payment?

b. It this is an interest-only loan for 5 years with monthly payment, i.e., you pay monthly interest only for the first five years, and then you make equal amortized payments monthly in the second five years, how much are your monthly payments in the first and second five years respectively?

6. (PV) You have just joined an investment bank. The company offers you two different salary arrangements. You can have $50,000 per year for the next 3 years or $30,000 per year for the next 3 years, along with a $50,000 signing bonus today. If the market interest rate is 16%, which salary arrangement do you prefer?

7. (EAR and Nominal Interest Rate) An investment will increase in value by 270% over the next 17 years. What is the annual interest rate which, when compounded quarterly, provides this return?

8. (Perpetuity)A firm invests $3 million in a project which will yield a perpetuity of $1 million per year. What is the discount rate r for which this projects present value is $4.5 million?

9. (Amortization) You just bought a car with loan of $50,000. You have to repay the loan in 6 years with monthly payments. The interest rate on the loan is 4%. a. What is your monthly payment?

b. How much will you still owe after 4 years? (i.e. what is the loan balance after 4 years?)