A severance package for an employee is designed as follows: The terminated employee will receive monthly payments at the end of each month for a period of one year (12 payments). The first payment is $6,000 and each successive payment is reduced by 5% (i.e. the second payment amount is 95% of th first payment amount, the third payment amount is 95% of the second payment amount, etc). As soon as the employee receives each payment, they deposit them into an account earning a nominal annual rate of interest of 8.4%. Determine the accumulated value in the account at the end of the year (following receipt and deposit of the 12th payment). Hint: "inflation" is a negative 5%.

		< 60,000
		60,000 but < 70,000
		70,000 but < 80,000
		80,000 but < 90,000
		90,000

A 10year $500 Par (face) value callable bond with annual coupons may be redeemed at the Par (face) value by the bond issuer at any coupon date from the 7th coupon until the 10th coupon. (i.e. can be redeemed at t=7, 8, 9, or 10). The coupon rate is an annual effective rate of 5%. Determine the price of the bond if the purchaser desires a minimum yield of 5.7%. Hint: determine if the bond is bought at a premium or discount and that will indicate when then bond will be redeemed and the price will be based off the corresponding redemption date.

		< 475
		475 but < 500
		500 but < 525
		525 but < 550
		550