You are interested in purchasing a new Honda sedan that costs $45,000. The dealership offers you a special financing rate of 5.0% per month for 60 months. Assuming that you use your savings to make a 10% down payment on the sedan and you take the dealer's financing deal over next the five years, how much would be your monthly car payment?

2. Tom was injured in an accident, and the insurance company has offered him the choice of $25,000 per year for 15 years, with the first payment being made TODAY or a lump sum. If a fair return is 7.0%, how large must the lump sum be to leave him as well off financially as with the annuity?

3. You just got a new part-time job and you need to buy a new car for your job. Suppose you have enough savings to pay the downpayment and you can only afford to pay $400 a month starting one month from now. Suppose your car dealer offers you a car loan with an annual interest rate of 6 %, how much will you be able to borrow for the new car today if you finance the amount over 5 years?

4. Suppose you just became a freshman student and decided to open a new coffee shop on the NSU Campus selling coffee and cookies (open every morning and weekends only) for the next for years until you graduate. I can get a loan for your new coffee shop from a local bank with an annual interest of 8 percent (8% per year). Your total loan amount to invest in your new coffee shop is $100,000 and you expect to make a profit of 50,000 in one year's time, 75,000 in two year's time, 90,000 in three years' time and 100,000 in four years' time.

1) Compute the present value of each year for the next four years. What is your estimated total present value (PV) of your coffee shop?

2) Suppose you can become a partner with other friends in your class to open a pizza restaurant in Downtown Norfolk by contributing $50,000 only without opening your own coffee shop. You can get a loan of $50,000 with the same interest rate from the same local bank at 8% per year. Your annual income from your investment in the Pizza restaurant is $50,000 for the next four years. What is the total present value of your four years's income?.

3)By comparing the costs/expenses and benefits/income from two options (coffee shop vs pizza restaurant), which project would you choose to maximize your income/profit?. Why?

Your estimated future income A business promises to pay the investor of today for a payment of $5000 in one year's time, $7500 in two years' time, and $10,000 in three years' time. What is the present value of this business opportunity if the interest rate is 8.5 % per year?