Show calculations for each of the following situations.

1. A friend would like to borrow some money from you now and repay you in two years. He wants to borrow a reasonable amount so that you earn 5% on your loan. He will pay you $5,000 two years from today. How much would you loan him to earn a 5% return?
2. As a plan b, your friend from above offers to borrow $4,000 today and repay you $5,000 in three years. What interest rate would you earn on this arrangement?
3. You establish a goal of buying a house in 5 years with a 40% down payment. You estimate that the kind of house you want will sell for $200,000 at the time you buy it. Assuming you can earn a 3% annual return on your fund balance, that you will make equal annual investments, and that you will invest at the end of each of the 5 years, what annual deposit will allow you to reach your goal?
4. You are about to buy a car. The specific model and features you selected will cost $30,000 beyond the amount you will pay at the time of purchase. You will borrow that additional $30,000. Your credit union will charge you 7% interest on your 4-year loan. Assume you will make annual payments on this loan. What is the amount of your payment?
5. Assume the same conditions as in part D, except that now you will be making monthly payments. What is the new amount of your payment?
6. Comment on why the annual payment in D and the total of 12 monthly payments in E are not the same amount.