Appendix 13A - In-Class Case 1. You invest $1,000 in an investment account earning 10% annual interest. What is the investment worth after 3 years? 2. You want to go to graduate school in four years and will need $16,000 to do so. If you can earn 10% annually, how much must you invest today to accumulate the required amount? 3. You want to invest $10,000 per year for the next 3 years. The investment account is expected to earn 10% annually. What will the investment be worth in 3 years? 4. You want to buy a new car for $20,000. You make a down payment of $6,000 and finance the remainder for 36 months at 12% annual interest. What is the amount of your monthly payment? 5. You want to buy a car. You can afford monthly payments of $250 for 3 years. The bank charges 9% annual interest. What is the maximum price you can pay for the car? 6. You just won the lottery. You can receive your prize in one of three ways: (1) $50,000 cash immediately, (2) $20,000 cash immediately and $8,000 annually for 5 years, or (3) $13,000 annually for 5 years. Which option should you choose if you can earn 8% annually? 7. You just signed a promissory note agreeing to pay the bank a lump-sum payment of $100,000 in 10 years. The bank charges 9% annual interest. How much money will you receive today? 8. You just signed a promissory note agreeing to pay the bank $8,000 every six months and $160,000 at the end of 10 years. The bank charges 8% annual interest. How much money will you receive today? 9. You are considering investing in $20,000, 5%, 10-year bonds paying interest annually. The current market rate (effective interest rate) is 3%. What amount would the bonds sell for? 10. You are considering investing in $20,000, 4%, 10-year bonds paying interest annually. The current market rate (effective interest rate) is 5%. What amount would the bonds sells for