1. Your aunt is about to retire, and she wants to sell some of her stock and buy an annuity that will provide her with income of $53000 per year for 30 years, beginning a year from today. The going rate on such annuities is 7%. How much would it cost her to buy such an annuity today?
2. What's the present value of a 4-year ordinary annuity of $2,250 per year plus an additional $3,800 at the end of Year 4 if the interest rate is 5%?
3. What annual payment must you receive in order to earn a 6% rate of return on a 4 year annuity that has a cost of $2600?
4. What's the present value of $11500 discounted back 5 years if the appropriate interest rate is 4%, compounded semianually?
5. Suppose you borrowed $30,000 at a rate of 8% and must repay it in 5 equal installments at the end of each of the next 5 years. By how much would you reduce the amount you owe in the first year