Instructions:

Solve the problems sequentially by hand only. Each problem must be solved in a separate sheet of paper.

Draw a neat CFD as required for each problem.

Submit your work as a single pdf in Canvas named as "Lastname$\_$ACT$2.$pdf$"$

Problem $1$:

Trevor needs a new computer for college. His uncle lends him $$1,000$ at $5$ percent interest for $3$ years.

a$)$ What is the total payment after $3$ years if simple interest is used?

b$)$ How much of the total payment is simple interest?

c$)$ What is the total payment after $3$ years if compound interest is used?

d$)$ How much of the total payment is compound interest?

Problem $2$:

For your twenty$-$first birthday, your grandfather offers you a gift of $$1,000$ today. However, you have the choice of waiting $3$ years and receiving $$1,500$ or waiting $5$ years and receiving $$3,000.$ If your money grows at a rate of $8$ percent compounded annually, which alternative should you choose?

Problem $3$:

If you invest $$1,500$ today and withdraw $$2,500$ in $3$ years, what interest rate was earned?

Problem $4$:

If you invest $$2,000$ today, withdraw $$1,000$ in $3$ years, deposit $$3,000$ in $5$ years, deposit $$1,500$ in $8$ years, and withdraw the entire sum $3$ years after the final deposit, how much will you withdraw? Interest is $7$ percent per year.