1.You have a student loan that requires you to pay $181 per month, starting next month, for 65 months.

You can make these payments or enter a new loan that requires you to pay $106 per month, starting next month, for 37 months.

To switch to the new loan will cost you a "financing fee" of $1,640 today.

If your investments earn 3.31% APR (compounded monthly), how much do you save in PV terms by taking out the new loan?

2.You would like to buy a retirement home in Florence, Italy in 5 years. The type of home you want to buy currently costs $475,070, but you expect the price to rise at 3% per year for the next 5 years.

If your investments earn 6.9% APR compounded annually (nominal), how much do you have to invest in today to be able to purchase your retirement home?

3.You start a business that you expect will provide you with income of $53,507 per year for 11 years. Since this is a "start-up" business, it will not begin providing you income until 4 years from now. If market interest rates are 3.32% APR (compounded annually), what is the market value of this business today?

4.You can pay $141 per month, starting next month, for the next 5 years to have a lawn mowing service.

Alternatively, you can purchase a riding lawn mower and pay $692 today and mow your own lawn for 5 years, starting next month.

If you decide to mow your own lawn, how much do you save in PV terms if your investments earn 3.47% APR, compounded monthly?

Note:If you would lose money, make your answer with a negative sign (e.g., - 3458)

5.An investment company offers to sell you an annuity that pays $2,231 per month, starting next month, for 12 years. If your investments earn 3.98% APR (compounded monthly), how much should you pay today for the investment?

6.You have a mortgage balance of $110,000 that will require you to make 120 more payments of $1,007, starting next month.

Alternatively, you can take out a loan today for $110,000 with an interest rate of 2.84% APR compounded monthly and pay off the original mortgage.

The new loan will require you to make 120more payments, starting next month.

If your investments earn 5.79% APR, compounded monthly, how much will you save in PV terms by taking out the new loan to pay off the original mortgage?

7.If you invest $4,057 today and in years 1, 2 and 3 in an account that earns 4.43%APR (compounded annually), how much will you have in the account in 13 years?

8.If you deposit $5,317 today in an account that pays 3.01% APR (compounded monthly), how much will you have in the account in 33 years?

9.You would like to buy a house and will need a down payment of $18,005 in 6 months.

How much would you have to invest, each month, starting next month, for 6 months to exactly pay for the down payment if your investments earn 3.06% APR compounded monthly?

10.You want to be able to spend thecurrent equivalentof $55,869 per year during your retirement that willstart in 17 years, and gofor 28 years.

You expect inflation to be 3% per year during your retirement.

How much would you have to invest in nominal terms in years 1 to 10, to fully pay for your retirement if your investments earn 8.12% APR (annual compounding)

11.You plan to go to school for 4 years, starting next year.

You can pay $41,606 per year, starting next year or you can pay a single amount of$147,344 today.

If your investment account earns 3.9% compounded annually, how much would you save or lose in PV terms by paying all the tuition today?

Note:If you would lose money by paying today, make your answer with a negative sign (e.g., - 3458)

12.If you deposit $1,256 each month, starting next month, for 29 months, in an account that pays 3.44% APR (compounded monthly), how much will you have in the account in 29 months?