1. Assuming that the annual interest rate is 7%, how much would you pay to receive $100 every year, growing at 5%, annually, forever? Round off your final answer to the nearest dollar.
2. What is the future value three years from now of $1000 invested in an account with a stated annual interest rate of 8%, if compounded semi-annually? Round off your final answer to three digits after the decimal. State your answer as 'x.xxx'
3. What is the future value three years from now of $1000 invested in an account with a stated annual interest rate of 8%, if compounded monthly? Round off your final answer to three digits after the decimal point State your answer as 'x.xxx'.
4. You want to retire a millionaire when you are 65. Currently, you have $20,000 in savings and are 30 years old. How much will you have to save each year for the next 35 years in order to have $1,000,000? Assume you earn 9% on your savings every year. Round off your final answer to three digits after the decimal point. State your answer as 'x.xxx'
5. You want to lease a set of golf clubs from Holes, Ltd. The lease contract is in the form of 24 equal monthly payments at a 12 percent, compounded monthly. Since the clubs cost $4,000 retail, Holes wants the present value of the lease payments to equal $4,000. Suppose you first payment is due immediately. What will your monthly lease payment be? Round off your final answer to one digit after the decimal point. State your answer as 'x.x'