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S10 Present value: Maria Addai has been offered a future payment of $750 two years from now If she can earn 6.5 percent compounded annually, on her investment, what should she pay for this investment today? 5.11 Present value: Your brother has asked you for a loan and has promised to pay you $7.750 at the end of three years. If you normally invest to carn 6 percent per year, how much will you be willing to lend to your brother if you view this purcly as a financial transaction (ieyou dont give your brother a special deal) 512 Present value: Tracy Chapman is saving to buy a house in five years She plans to put 20 percent down at that time, and she believes that she will need $35,000 for the down payment. lf Tracy can nvest in a fund that pays 9.25 percent annually, how much will she have to invest today? 13 Present value: You want to buy some bonds that will have a value of $1,000 at the end of seven years The bonds pay 4.5 percent interest annually How much should you pay for them today 5.14 Present value: Elizabeth Sweeney wants to accumulate $12,000 by the end of 12 years. If the annual interest rate is 7 percent, how much will she have to invest today to achieve her goal 5.15 Interest rate: You are in desperate need of cash and turn to your uncle, who has offered to lend you some money. You decide to borrow $1,300 and agree to pay back $1,500 in two years Alterna borrow from your uncle or the bank? ally. How long will it take to double your money tively you could borrow from your bank that is charging 6.5 percent interest annually, Should 5.16 Number of periods: You invest $150 in a mutual fund today thast pays 9 percent interest