1. What is the price of a 15-year bond with a par value of $10,000 and a 3% annual coupon rate? The interest rate for investments of similar risk is 8% annually.
2. (a) How much should you pay each month to pay off a credit card debt of $8,500? The credit card carries an interest rate of 24%. You want to pay off the debt with equal monthly payments in 2 years.(b) How much total interest do you pay?
3. You wish to retire at age 65 with $1,000,000. If you start saving at age 25, how much must you put away each quarter into a retirement account that yields 4.8% interest compounded quarterly?
4. You deposit $100 each month into an investment fund that yields 2% interest compounded monthly. (a) How much money will you have after 20 years? (b) How much interest have you earned after 20 years?
5. If you can afford $3000 per month for a 30-year mortgage with 6% interest, how expensive a home can you afford to buy?