Old Time Savings Bank pays 3% interest on its savings accounts. If you deposit $1,500 in the bank and leave it there:(Do not round intermediate calculations. Round your answers to 2 decimal places.)

a.How much interest will you earn in the first year?

b.How much interest will you earn in the second year?

c.How much interest will you earn in the 10th year?

Compute the future value of a $125 cash flow for the following combinations of rates and times.(Do not round intermediate calculations. Round your answers to 2 decimal places.)

a.r= 8%;t= 10 years

b.r= 8%;t= 20 years

c.r= 4%;t= 10 years

d.r= 4%;t= 20 years

If you earn 9% per year on your bank account, how long will it take an account with $105 to double to $210?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

In 1880 five aboriginal trackers were each promised the equivalent of 50 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 2001 the granddaughters of two of the trackers claimed that this reward had not been paid. The prime minister stated that if this was true, the government would be happy to pay the $50. However, the granddaughters also claimed that they were entitled to compound interest.

a.How much was each granddaughter entitled to if the interest rate was 4%?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.How much was each entitled to if the interest rate was 8%?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Your wealthy uncle established a bank account with $2,600 for you when you were born. For the first 7 years of your life, the interest rate earned on the account was 5%. Since then, rates have been only 3%. Now you are 22 years old and ready to cash in. How much is in your account?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

What is the present value of the following cash-flow stream if the interest rate is 4%?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

Year Cash Flow

1 $270

2 $470

3 $370

A factory costs $300,000. You forecast that it will produce cash inflows of $90,000 in year 1, $150,000 in year 2, and $240,000 in year 3. The discount rate is 11%.

a.What is the value of the factory?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.Is the factory a good investment?

• Yes
• No

A famous quarterback just signed a contract for $8 million, providing $2.7 million a year for 4 years. A less famous receiver signed a contract for $7.0 million, providing $3 million now and $2.2 million a year for 4 years. The interest rate is 8%.

a.What is the PV of the quarterback's contract?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

b.What is the PV of the receiver's contract?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.)

c.Who is better paid?

• Quarterback
• Receiver

a.If you borrow $2,500 and agree to repay the loan in five equal annual payments at an interest rate of 12%, what will your payment be?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.What will your payment be if you make the first payment on the loan immediately instead of at the end of the first year?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

You believe you will need to have saved $520,000 by the time you retire in 40 years in order to live comfortably. If the interest rate is 5% per year, how much must you save each year to meet your retirement goal?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

A store will give you a 2.75% discount on the cost of your purchase if you pay cash today. Otherwise, you will be billed the full price with payment due in 1 month. What is the implicit borrowing rate being paid by customers who choose to defer payment for the month?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

a.How much will $100 grow to if invested at a continuously compounded interest rate of 10.75% for 8 years?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

b.How much will $100 grow to if invested at an annual interest rate of 10.75% for 8 years?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

In April 2016 a pound of apples cost $1.58, while oranges cost $1.22. Two years earlier the price of apples was only $1.37 a pound and that of oranges was $1.08 a pound.

a.What was the annual compound rate of growth in the price of apples?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

b.What was the annual compound rate of growth in the price of oranges?(Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

c.If the same rates of growth persist in the future, what will be the price of apples in 2030?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

d.What about the price of oranges?(Do not round intermediate calculations. Round your answer to 2 decimal places.)

An engineer in 1950 was earning $5,100 a year. In 2015 she earned $99,000 a year. However, on average, prices in 2015 were higher than in 1950. What was her real income in 2015 in terms of constant 1950 dollars? Use the data inTable 5.8.(Round your answer to 2 decimal places.)