P332 Question 9-15 (Should look like the example on p314)

Find the future values of the following ordinary annuities:

a. FV of $400 every six months for five years at a simple rate of 12 percent, compounded semiannually b. FV of $200 each three months for five years at a simple rate of 12 percent, compounded quarterly c. The annuities described in parts (a) and (b) have the same amount of money paid into them during the five-year period and both earn interest at the same sample rate, yet the annuity in part (b) earns $101.75 more than the one in part (a) over the five years. Why does this occur? PVOrdinary Annuity, Various Compounding Periods

P333 Question 9-18 ( should look like the example on p314)

Sue wants to buy a car that costs $12,000. She has arranged to borrow the total purchase price of the car from her credit union at a simple interest rate equal to 12 percent. The loan requires quarterly payments for a period of three years. If the first payment is due in three months (one quarter) after purchasing the car, what will be the amount of Sues quarterly payments on the loan?

P333 Question 9-21 ( should look like the example on P314)

Jack just discovered that he holds the winning ticket for the $87 million mega lotteries in Missouri. Now he needs to decide which alternative to choose: (1) a $44 million lump-sum payment today or (2) a payment of $2.9 million per year for 30 years. The first payment will be made today. If Jacks opportunity cost is 5 percent, which alternative should he choose? TVM Comparisons Lottery Winner 9-22 Consider the decision you might have to make if

P333 Question 9-24 ( your choice on how to answer but show your work)

Assume that you need $1,000 four years from today. Your bank compounds interest at an 8 percent annual rate.

a. How much must you deposit one year from today to have a balance of $1,000 in your account four years from today?

b. If you want to make equal payments each year, how large must each of the four payments be if the first deposit is made one year from today?

c. If your father were to offer either to make the payments calculated in part (b) ($221.92) or to give you a lump sum of $750 in one year, which would you choose?

d. If you have only $750 in one year, what interest rate, compounded annually, would you have to earn to have the necessary $1,000 four years from today?

e. Suppose you can deposit only $186.29 each for the next four years, beginning in one year, but you still need $1,000 in four years. At what interest rate, with annual compounding, must you invest to achieve your goal?