Mike tries to borrow money from a bank. The bank says that you have to pay W40,000 in a week for W30,000 today. If he asks the interest rate to the bank, what is the answer (APR)? What is the actual interest rate (EAR) for this loan?

Now, it is January. Lisa has to withdraw W1,000,000 per quarter for four years from this April to pay her tuition. If the account pays 0.5% interest per quarter, how much should she put into the account now?

You want to save for 30 years for your retirement. You will put W70,000 into a stock account and W30,000 into a bond account per month. The rate of return of the stock account is 10% and that of the bond account is 5%. When you retire, you will withdraw all money in both accounts and put the money into another annuity account whose rate of return is 9%. For 25 years after your retirement, how much can you get paid from this new annuity account per month?

You are considering buying a machine of W3,400,000 on January 1, 2008. This machine will generate the revenue of W1,000,000 on December 31, the cost of W100,000 on January 1 (even on purchasing day). If you can use the machine for 5 years and discount rate is 10%, will you buy it? If the discount rate is 9%, what would you do?

Your son needs to decide his career. He will decide his major between engineering and business. If he takes engineering, the plan is as follows. He will pay W12,000,000 for his tuition in his undergraduate program and take a job for 2 years earning W20,000,000 for the first year and W25,000,000 in the next year. Then, he will enter into a masters program whose tuition is W15,000,000 per year. For the next 25 years, he will work as an engineer earning W40,000,000 per year. If he takes business as his major, he pays W13,000,000 per year as his tuition for four years, and will earn W31,000,000 for the next 31 years. We assume that all earnings and costs happen at the end of year and discount rate is 5%, which major should he take?