1. A sum of money is invested at 8.4% compounded monthly for 6 years. State the following: (6 marks)
   1. the nominal annual rate of interest.
   2. the number of compounding periods per year.
   3. the periodic rate of interest.
   4. the number of compounding period in the term.
   5. the compounding factor (1+i)ⁿ
   6. the numerical value of the compounding factor.
2. Calculate the Future Value. (3 marks)

Principal	Time	Annual Rate	Compounded	Future Value
$6540	4 years	9%	annually
$2375	7 years	8.5%	semi-annually
$850	5 years	10%	quarterly

3. Calculate the Present Value. (3 marks)

Future Value	Time	Annual Rate	Compounded	Present Value
$4500	6 years	7%	annually
$6500	3 years	4.5%	semi-annually
$7890	4.5 years	8%	quarterly

4. What sum deposited now will amount to $10,000 in 3 years at 10% per annum, compounded semi-annually? (3 marks)

5. Two offers are received by Joshua Brown for his house. One is a cash offer of $175 000. The other is an offer of $88 000 cash and $95 000 to be paid in three years. If the money is 7% per annum compounded annually, which is the better offer and why? (3 marks)

6. An investment of $3000 is accumulated at 6% compounded quarterly for three and a half years. At the same time, the interest rate is changed to 9% compounded monthly. How much is the investment worth three years after the change in interest rate? (6 marks)