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1. After placing $8,000 in a savings account paying annual compound interest of 7%, calculate the amount that will accumulate if it is left for 10 years?
2. After placing $13,000 in a savings account paying annual compound interest of 4%, Leona will accumulate what amount if she leaves the money in the bank for 3 years?
3. What is the present value of a $650 perpetuity discounted back to the present at 12%? What is the present value of the perpetuity?
4. What is the present value of a perpetual stream of cash flows that pays $80,000 at the end of one year and grows at a rate of 7% indefinitely? The rate of interest used to discount the cash flows is 9%. What is the present value of the growing perpetuity?
5. How much do you have to deposit today so that beginning 11 years from now, you can withdraw $9,000 a year for the next eight years (periods 11 through 18) plus an additional amount of $18,000 in the last year (period 18)? Assume an interest rate of8%. What is the amount of money you would need to deposit today?