1. You have $50,000 invested in an account paying 3.50%. If you just finished paying your total college expenses for the coming year and your college costs $19,000 per year, how many years will your money last? (Treat your costs like an annuity with the first payment one year from today.)
2. You have a choice between a lottery lump sum payout of $10,000,000 today or a series of twenty-five annual annuity payments $800,000 (first payment one year from today). At an interest rate of of 6.50%, which one do you choose?
3. Your company intends to finance the purchase of a new construction crane. The cost is $1,500,000. Compare the interest cost of three different types of loans for 10 years (discount loan, interest only loan, amortized loan) at the interest rate of 8%.