1. A store offers two payment plans. Under the installment plan, you pay 25% down and 25% of the purchase price in each of the next 3 years. If you pay the entire bill immediately, you can take a 10% discount from the purchase price. Assume the product sells for $100. a .Calculate the present value of the payments, if you can borrow or lend funds at an interest rate of 5 percent. Which is a better deal? b. Calculate the present value, if the payments on the 4-year installment plan do not start for a full year. Which is a better deal?

2. A couple thinking about retirement decide to put aside $3,000 each year in a savings plan that earns 8% interest. In 5 years they will receive a gift of $10,000 that also can be invested. a. How much money will they have accumulated 30 years from now? b. If their goal is to retire with $800,000 of savings, how much extra do they need to save every year?