1. A bank is newly established and offers savings deposits rate of 3% compounded semi-annually. If you deposit $50,000 into that account, how many years will you have to wait until your account is worth $70,000? (3 marks)

2. You need $200,000 for a new house in 6 years. If you could earn 0.8% per month, how much will you have to deposit today? (3 marks)

3. At 5% interest rate compounded quarterly, how many years does it take to quadruple your money? (3 marks)

4. An investment guarantees that you can receive back $9,000 five years later by investing $6,000 today. What interest rate do you earn if the rate is compounded annually? (3 marks)

5. Suppose there is an investment project with the following cash flows to be received at the end of next three years.

If the interest rate is 8 percent:

Year	Cash Flow
1	$600
2	900
3	1,300

1. What is the value of these cash flows at the end of Year 3? (3 marks)

2. What is the value of these cash flows today (today is Year 0)? (3 marks)

6. Suppose you need to borrow $3,000 to take a vacation trip to Thailand. The bank offers a 24-month instalment plan with an interest rate of 6% per year. How much would your monthly payment be? (3 marks)

7. An insurance company is selling a perpetual annuity contract that pays $3,000 monthly. The contract sells for $108,000. What is the monthly return on this investment vehicle? (3 marks)

8. What is the present value of an annuity that pays ten annual cash flows of $3,000 each, beginning in 5 years? Assume that the appropriate discount rate is 8%. (6 marks)