1. Its finally time to buy that new SUV youve been wanting. The price is thirty-five thousand dollars, you put five thousand dollars down and finance the rest at 6% interest over six years with monthly payments.

How much is each monthly payment?

Loan Payment = PV of An Annuity

[1 (1 +.005)^-72]/.005

2. Youve won the lottery and will receive ten thousand dollars per year, paid quarterly, for the next fifty years. If the appropriate discount rate is 10%, what is the present value of your winnings?

PV of An Annuity = Periodic Cash Flow * [1 (1 + .03)^-200]

.03