1. You borrow $6,000 to buy a car. The terms of the loan call for monthly payments for five years at 5% p.a. What is the amount of each payment?
2. Today, you are retiring. You have a total of $500,000 in your retirement savings and have the funds invested such that you expect to earn an average of 3% p.a., compounded monthly, on this money throughout your retirement years. You want to withdraw $2,500 at the beginning of every month, starting today. How long will it be until you run out of money?
3. A General Co. bond has a 5 percent coupon and pays interest annually. The face value is $1,000 and the current market price is $1,020.50. The bond matures in 20 years. What is the yield to maturity?
4. Wine and Roses, Inc. offers a 7 percent coupon bond with semiannual payments and a yield to maturity of 8 percent. The bonds mature in 9 years. What is the market price of a $1,000 face value bond?