Problem 2

Find the interest rates implied by each of the following:

2a. You borrow $1500 today and promise to repay the loan by making a single payment of $2114.00 in 5 years.

2b. You invest $500 today and receive a promise of receiving back $193.50 for each of the next 4 years.

Problem 3

If $2000 is invested today at a 12% nominal interest rate, how much will it be worth in 15 years if interest is compounded 3a. Annually

3b. Quarterly

3c. Monthly

3d. Daily (365-days per year)

Problem 4

How long will it take your money to triple given the following interest rates?

4a. 5%

4b. 10%

4c. 15%