Question: Exercise 1 Robert loans $10,000 immediately, $5,000 in 3 years and $1,000 in 4 years to George. George will repay the loan in 6 years.

Exercise 1

Robert loans $10,000 immediately, $5,000 in 3 years and $1,000 in 4 years to George. George will repay the loan in 6 years.

a) What will be the amount of this repayment if the interest rate on this loan is 6% capitalized on a monthly basis?

b) What will be the present value V0 of this amount?

Exercise 2

Christophe makes 2 deposits in an account paying an effective annual rate of interest of r = 8%. P dollars today and 1.5 x P dollars in 2 years. In 5 years, the amount accumulated in this account is (P + 3,000). Determine P.

Exercise 3

How much must Liam deposit in a 6% savings account if he wants it to amount to 120$ after two years?

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