You are required to show your work. Providing answers alone will not get you full credit. 1. YAA Bank is newly established and offers savings deposits rate of 6% compounded semiannually. If you deposit $100,000 into that account, how many years will you have to wait until your account is worth $120,000 ? ( 3 marks) 2. You need $300,000 for a new house in 8 years. If you could earn 0.6% per month, how much will you have to deposit today? ( 3 marks) 3. At 6% interest rate compounded quarterly, how many years does it take to quadruple your money? (3 marks) 4. An investment guarantees that you can receive back $10,000 five years later by investing $7,000 today. What interest rate do you earn if the rate is compounded semi-annually? ( 3 marks) 5. Suppose there is an investment project with the following cash flows to be received at the end of next three years. If the interest rate is 6 percent: (a) What is the value of these cash flows at the end of Year 3 ? (3 marks) (b) What is the value of these cash flows today (today is Year 0 )? (3 marks) 6. Suppose you need to borrow $4,000 to take a vacation trip to Bangkok. The bank offers a 24 month instalment plan with an interest rate of 8% per year. How much would your monthly payment be? ( 3 marks) 7. An insurance company is selling a perpetual annuity contract that pays $2,000 monthly. The contract sells for $138,000. What is the monthly retum on this investment vehicle? ( 3 marks) 7. An insurance company is selling a perpetual annuity contract that pays $2,000 monthly. The contract sells for $138,000. What is the monthly return on this investment vehicle? ( 3 marks) 8. What is the present value of an annuity that pays six annual cash flows of $2,000 each, beginning in 4 years? Assume that the appropriate discount rate is 8%. (6 marks)