QUESTION 1

a. If you deposit $90,000 in a bank account that pays 8% interest annually, how much will be in your account after 7 years?

b. What is the present value of a security that will pay $50,000 in 20 years if securities of equal risk pay 9% annually?

QUESTION 2

Ana made an investment that is expected to pay $2500 at the end of each of the next 3 years, $3500 at the end of Year 4, $4000 at the end of Year 5, and $6500 at the end of Year 6. Assume similar investments earn 5% annually.

a. Find the present value of this investment?

b. Find the future value of this investment?