Q1. You want to buy a house and have determined you can afford a 30 year mortgage with monthly payments of $1,258. If the APR on the loan is 5.2%, how much home can you afford to buy___ Q2. What is the present value of a perpetuity that pays $4,000 per year if the cost of capital is 6.7%? Assume payments occur at the end of the year.___ Q3. What is the difference in present value between a perpetuity that pays $8,500 per year and an ordinary annuity that pays $8,500 per year for 23 years? Assume a discount rate of 9%.____ Q4. A star quarterback just signed with a team that offered a contract that pays $9,000,000 today, $1,000,000 at the end of year 1, $4,000,000 at the end of year 2, and $6,000,000 at the end of year 3. If the discount rate is 7%, what is the present value of this compensation package?___

Q5. An ordinary annuity has a present value of $15,000. What would be the present value if the first payment were not received until the end of year 8? Assume a cost of capital of 8%.___