What is the present value of an annuity of $6,400 per year, with the first cash flow received three years from today and the last one received 25 years from today? Use a discount rate of 6 percent. (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Suppose you just bought a 15-year annuity of $8,000 per year at the current interest rate of 11 percent per year.

What is the value of your annuity today? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$ 57,526.96

What is the present value if interest rates suddenly drop to 6 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

$

What is the present value if interest rates suddenly rise to 16 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Present value

You are saving for the college education of your two children. They are two years apart in age; one will begin college 14 years from today and the other will begin 16 years from today. You estimate your childrens college expenses to be $35,000 per year per child, payable at the beginning of each school year. The annual interest rate is 6.5 percent. Your deposits begin one year from today. You will make your last deposit when your oldest child enters college. Assume four years of college.

How much money must you deposit in an account each year to fund your childrens education? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Annual savings

$

On September 1, 2009, Susan Chao bought a motorcycle for $40,000. She paid $1,100 down and financed the balance with a five-year loan at a stated annual interest rate of 8.2 percent, compounded monthly. She started the monthly payments exactly one month after the purchase (i.e., October 1, 2009). Two years later, at the end of October 2011, Susan got a new job and decided to pay off the loan.

If the bank charges her a 1 percent prepayment penalty based on the loan balance, how much must she pay the bank on November 1, 2011? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Total payment

$

$