WEEK THREE

1. Assume that a college parking sticker today costs $76. If the cost of parking is increasing at the rate of 5% per year, how much will a college parking sticker cost in eight years? (Round your answer to 2 decimal places.)

Future value

2. Assume that the average price of a new home is $120,500. If new homes are increasing at a rate of 10% per year, how much will a new home cost in eight years? (Round your answer to 2 decimal places.)

Future value

3. An investment will pay you $9,000 in 9 years, and it will also pay you $280 at the end of each of the next 9 years (years 1 thru 9). If the annual interest rate is 5%, how much would you be willing to pay today for this type of investment? (Round your intermediate calculations and final answer to the nearest whole dollar.)

Present value

4. A college student is reported in the newspaper as having won $9,500,000 in the Kansas State Lottery. However, as is often the custom with lotteries, she does not actually receive the entire $9.5 million now. Instead she will receive $475,000 at the end of the year for each of the next 20 years. If the annual interest rate is 6%, what is the present value (todays amount) that she won? (ignore taxes). (Round your answer to nearest whole dollar.)

Present value

PLEASE ANSWER EACH QUESTION; FILL IN THE BLANK