9. Here's something pretty crazy: In the late 1920 's, England floated a special debt issue, comprised of bonds called "consols." The government was saddled with heavy debt from the First World War, and so these bonds were designed to be attractive. The Exchequer (the British treasury) wanted investors to buy them, so the $1000 bonds paid whomever bought them 4% interest per year...forever! If interest rates are currently at 7% what would one of those consols be worth now if you could find one to buy? 10. You're having to commute to campus from Fredericton's North Side everyday, and you're tired of the long delays on the Westmoreland and Princess Margaret bridges. You've had your eye on a used GMC 1944 DUKW 353, which will enable you to cross the river without having to bother with a bridge. It's selling for a mere $11,000, and although its engine, rudder, and bilge pumps are missing, you figure you'll manage without. (Like no one's ever heard of sails, oars, and bucket, or what?) A bank officer, in a fit of whimsy, has offered you a loan for the full amount, to be paid in four years (annual payments) at 11% interest. a) Start by telling me the size of your annual payments, b) Then set up a table (amortization schedule) with these 6 columns: 1) Year 2) Principal Balance (at beginning of year) 3) Annual Loan Payment 4) Interest Paid 5) Amortization Payment (which is applied to the outstanding principle) 6) Principal Balance (at end of year) 5. Starting on your 21st birthday, exactly two years from now, you'll be receiving $45,000 annual payments from a life insurance annuity your grandfather had set up before he died. Those payments will end when the last one is made on your 30th birthday. If interest rates are expected to hold around 7% over that period, what is the annuity worth in today's dollars