Name: _________________________________________

ID:______________

Question 1:
10% nominal rate.
N= 6 years
Using previous information, find the following:

a. PV of 1000 due in the future, monthly compounding discounted back six years.
b. Rework (a) assuming it is ordinary.
c. FV of 1000 paid each 4 months.
d. PV of 1500 perpetuity.
e. An initial 1000 compounded for 6 years.

Question 2:
Sara wants to inherit $20000 and invest it at 12% per year.

a. How much could she withdraw at the end of each year of the next five years?
b. If Sara wants to withdraw 1000 at the end of each year, how long would her fund
last?

Question 3:
Suppose you borrow $50000. The loans interest rate is 8%, and it requires five equal
beginning of year payments.

a. What is the loan’s equal payment?

b. Set up an amortization schedule that shows annual payment, interest payments,
principle repayment and beginning and ending loan balances.