You plan to live very well when you retire in thirty-five years and have calculated that you will require $3,000,000 at that time.  If the rate of interest available is 9%, how much do you need to invest today in order to live comfortable during your retirement?  What if rates are only 4.5%?

 

2. You are buying a previously owned car today at a price of $4,950. You are paying $750 down in cash and financing the balance for 42 months at 8.45 percent. What is the amount of each loan payment? 

 

3. A widget machine can be purchase for $2,400 and will create cash flows of $600 per year for the first two years, $1,000 in year 3, and $200 in Year 4.  At the end of year 4 the machine can be sold for $400.  The market rate of interest is 8.5%. Should you buy the machine?.