The following question covers time value of money:

a. A bank advertises an annual interest rate of 2.6% compounded monthly on their savings accounts. In percentage terms, what is the effective annual rate (EAR) on the loan? Round to two decimal places. (e.g., 5.43% --> 5.43)

b. Suppose you are planning to deposit $4,000 in a bank account. You'd like your deposit to grow to $7,000 in 4 years. If interest in the account compounds weekly, what annual interest rate do you need? Answer in percentage and round to two decimal places. (e.g., 5.43% --> 5.43) [Hint: The question is asking for the interest rate, so this is a "Solve for i" problem. Note that interest is non-annually compounded.]

c. Suppose you deposited $3,000 in a savings account earning 2.9% interest compounding daily. How long will it take for the balance to grow to $9,000? Answer in years rounded to two decimal places. (e.g., 2.4315 years --> 2.43) [Hint: The question is asking "how long", so this is a "solve for n" question. Note that interest is compounded non-annually.]

d. If the applicable discount rate is 3.7%, what is the present value of the following stream of cash flows? Round to the nearest cent. Cash Flow Year 1: $2,000 Cash Flow Year 2: $5,000 Cash Flow Year 3: $8,000 [Hint: You need to discount each cash flow separately to t=0 and then add them up. Be careful with n when finding the PV of each cash flow.]

e. You plan to deposit $3,000 today, $3,000 in one year and $3,000 in two years into an account earning 3.7% interest. What will the account balance be in 4 years? Round to the nearest cent. [Hint: Find the FV of each cash flow separately as of t=4 and sum them up. Careful with the n's.]