Assume that you are nearing graduation and that you have applied for a job with a local bank. As part of the

bank$$s evaluation process, you have been asked to take an examination that covers several financial analysis

techniques. The first section of the test addresses time value of money analysis. See how you would do by

answering the following questions:

a$.(1)$ What is the future value of an initial $$100$ after three years if it is invested in an account paying $10\%$

annual interest?

$(2)$ What is the present value of $$100$ to be received in three years if the appropriate interest rate is $10\%$

per year?

b$.$ What is the difference between an ordinary annuity and an annuity due? What type of annuity is shown in

the following cash flow time line? How would you change it to the other type of annuity?

$0123$

$100100100$

c$.(1)$ What is the future value of a $3-$year ordinary annuity of $$100$ if the appropriate interest rate is $10\%?$

$(2)$ What is the present value of the annuity?

$(3)$ What would the future and present values be if the annuity were an annuity due?

d$.(1)$ Define the stated, or quoted, or simple, rate, $($r SIMPLE$),$ annual percentage rate $($APR$),$ the periodic rate

$($r PER$),$ and the effective annual rate $($r EAR$).$

$(2)$ What is the effective annual rate for a simple rate of $10\%,$ compounded semiannually? Compounded

quarterly? Compounded daily?

e$.(1)$ Construct an amortization schedule for a $$1,000$ loan that has a $10\%$annual interest rate that is

repaid in three equal installments.