Problem 1:

You are at Sneaky Motors, Inc. a used car dealership. The salesman told you that you could leave the lot today for $240 per month for 60 months. When you look the car up online you believe the value of the car to be $10,000. If that is the value of the car, what is fhe interest rate (annual)?

Problem 2:

Your business invests $10,000 in an accouny which earns 2% APR. How much money will you have at the end of 10 years if the interest compunds monthly? How much if the interest compounds quarterly? Annually?

Problem 3:

You want to purchase a new retail location for your business. You think you will need to put $500,000 down as a down payment. You have $35,000 to set

aside now, and can save $15,000 per quarter. Your investment account earns 5% annually on average (compounding quarterly). How long do you think you will have to save until you have enough for the downpayment? Round your answer up to a full quarter.

Problem 4:

Mr. Davis is planning his retirement. Currently, Davis is 25 years old, and he wants to continue working until he is 65 at which point he will

stop setting aside money for retirment. Mr. Davis thinks he will need $3,000 per month ($36,000 per year) in retirement until he is 95 years

old. Mr. Davis thinks he can earn 7% (compounded annually) on his investments in his retirment account. While he is working, how much

per month does Mr. Davis need to save in order to reach his retirement goal?

Problem 5:

The local government changed the layout of the roads around one of your business' properties. Unfortunately, the change in roads caused your property to flood regularly and will no longer be suitable for use. As compensation, the government has offered you three options:

1) $500,000 today in a lump sum

2) $32,000 one year from now, and then every year for 50 years. (50 payments of $32,000)

3) $30,000 one year from now and then ever year forever ($30,000 per year in perpetuity)

You can earn 6% interest on your investments. Which option should you choose? For simplicity, assume annual compounding.

Please show your work.