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1. Kim deposits her annual bonus into a savings account that pays 7% interest compounded annually. The size of her bonus increases by $3,000 each year, and the initial bonus amount is $10,000. Determine how much will be in the account

immediately after the fifth deposit.

2. Five annual deposits in the amounts of $15,000, $14,000, $13,000, $12,000, and $11,000 are made into a fund that pays interest at a rate of 7% compounded annually. Determine the amount in the fund immediately after the fifth deposit.

3. What is the equal-payment series for 10 years that is equivalent to a payment series starting with $10,000 at the end of the first year and decreasing by $1,000 each year over 10 years? Interest is 7% compounded annually.

4. The maintenance expense on a machine is expected to be $5,000 during the first year and to increase $500 each year for the following ten years. What present sum of money should be set aside now to pay for the required maintenance expenses over the ten-year period? (Assume 8% compound interest per year.)

5. Matt Christopher is a 30-year-old mechanical engineer, and his salary next year will be $80,000. Matt expects that his salary will increase at a steady rate of 6% per year until his retirement at age 60. If he saves 10% of his salary each year and invest these savings at an interest rate of 8%, how much will he have at his retirement?

6. Suppose that an oil well is expected to produce 12, 00,000 barrels of oil during its first production year. However, its subsequent production (yield) is expected to decrease by 9% over the previous year's production. The oil well has a

proven reserve of 10,500,000 barrels.

(a) Suppose that the price of oil is expected to be $120 per barrel for the next six years. What would be the present worth of the anticipated revenue trim at an interest rate of 10% compounded annually over the next six years?

(b) Suppose that the price of oil is expected to start at $120 per barrel during the first year, but to increase at the rate of 3% over the previous year's price. What would be the present worth of the anticipated revenue stream at an interest rate of 10% compounded annually over the next seven years?

7. A city engineer has estimated the annual toll revenues from a proposed highway construction project over 20 years as follows:

A_n = ($2,000,000)(n)(l.06)^n-1

n = 1, 2, ... ,20.

To determine the amount of debt financing through bonds, the engineer was asked to present the estimated total present value of toll revenue at an interest rate of 6%. Assuming annual compounding, find the present value of the estimated toll revenue.

8. What value of C makes the two cash flows equal? Assume i = 12%.