Instructions: Determine a final numerical answer for each question. You will record your ANSWERS ONLY on THPS-3 Answer Submission Form on iCollege. For dollar answers (unless otherwise specifically instructed), round to the nearest cent (i.e., to 2 decimal places), but do NOT include a dollar sign or any commas on iCollege. For example, record $24,302.84962 as 24302.85. For percent answers (unless otherwise specifically instructed), round to 1 decimal place, but do NOT include a percent sign on iCollege. For example, record 0.154863 = 15.4863% as 15.5. If your answer is a negative amount, enter a hyphen (- ) before your number with no space between the hyphen and the number. For example, enter negative 319 as -319. For any other type of answers, follow the specific instructions in the question. 26. Assume that the expected inflation rate for the next 10 years is 7.9% per year. If the current price of a gallon of gas in Atlanta is $3.35 per gallon, and if the price of gasoline increases at 7.9% per year for the next 10 years, what is the projected price of a gallon of gasoline exactly 10 years from today (i.e., in 2034)? 27. What is the present value of the following cash flow stream at a rate of 10.725%? Year Cash Flow 0 $200 1 $75 2 $225 3 $0 4 $300 28. What is the effective annual rate (EAR) of 7.18% p.a., but with daily compounding (assume 365 days per year)? Round your answer to 2 decimal places (for example, record 0.1283684 as 12.84). 29. You expect to deposit the following cash flows at the end of years 1 through 5, $2,000; $4,000; $9,000; $5,000; and $1,000 respectively. What is the future account value at the end of year 6 if you can earn 9.5% compounded quarterly? 30. Justin won a contest at a local business that paid him a lump sum of $5,000. Justin, who just turned 22 years of age, has decided to invest his $5,000 for 45 years until he retires. During this time Justin believes that his account will earn 13% every year, compounded annually. As soon as he retires (exactly 45 years from today) Justin will start withdrawing retirement funds every year for an additional 33 years, but he plans to invest more conservatively at 8% compounded annually during retirement. How much can Justin withdraw each year in retirement? 31. You just graduated and you decided to purchase a new sports car to enjoy your newfound freedom. Your local credit union will provide financing for 84 months at a 8.2 percent annual rate, compounded monthly. The drive-out price of the car you are buying is $47,500. You must make a 10% down payment (i.e., you must pay the dealer $4,750 immediately) and then you will finance the remaining 90 percent of the purchase price with your credit union (i.e., with a 84-month loan at a rate of 8.2 percent p.a., compounded monthly). If your first payment is due exactly one month from today, what will be your required monthly payment? 32. Exactly five years from today, Prisha would like to buy a new living room set (couch, chairs, tables and lamps) with cash. Prisha currently has $750 saved in an investment account that pays interest of 4.25% p.a., but with monthly compounding. If Prisha deposits an additional $53 per month (with the first deposit made one month from today) into the account, what is the maximum amount that Prisha will be able to pay for her entertainment system exactly 5 years from today?33. What is the future value exactly twelve years after the last deposit of 65 annual deposits of $2,800 per year (first deposit to be made today) given an interest rate of 8.8% p.a.? 34. The Laker Bank offers a CD (i.e., certificate of deposit) that pays 6.33% p.a., but with monthly compounding. If Brony deposits $350,000 into this account today, how much will he have in his account in exactly 18 years? 35. If the real rate of interest is 1.6% and if the expected inflation rate is 8.8%, what is the present value of $150,000 to be received exactly 10 years from today? 36. Arjun plans to retire on his 65th birthday. However, he plans to work part-time until he turns 72. During these years of part-time work, he will neither make deposits to nor take withdrawals from his retirement account. Arjun will fully retire on his 72nd birthday. Assuming that Arjun can earn 7.8% p.a. on all money invested in his retirement account, what annual amount, starting on his 34th birthday, will Arjun have to save in order to have $2,500,000 in his account on his 72nd birthday? 37. With continuous compounding at 4.25% p.a. for 20 years, what is the future value exactly 20 years from today of a $120,000 initial investment (deposited today)?