1. Compounding Periods- As you increase the length of time involved, what happens to future values? What happens to present values?
2. Interest Rates- What happens to the future value of an annuity if you increase the rate r? What happens to the present value?
3. Present Value- Suppose two athletes sign 10-year contracts for $80 million. In one case, were told that the $80 million will be paid in 10 equal installments. In the other case, were told that the $80 million will be paid in 10 installments, but the installments will increase by 5 percent per year. Who got the better deal?
4. APR and EAR- Should lending laws be changed to require lenders to report EARs instead of APRs? Why or why not?