question #3 only

using the equation editor where necessary or you may neatly write them out, scan of photograph them and submit a single neat document. Show all of your work. Neatne counts!!! a. 1. Suppose you invest $10,000 in a savings account. What will it be worth in 3 years if you earn 3% interest compounded annually? b. What will it be worth in 3 years if you earn 4% interest compounded annually? What will it be worth in 7 years if you earn 3% interest compounded annually? d. What will it be worth in 3 years if you earn 3% interest compounded monthly? c. 2. What is the price of a perpetuity that has a coupon of $50 per year and a yield to maturity of 2.5%. If the yield to maturity doubles, what will happen to the perpetuity's price? 3. Suppose your discount rate is 2%. a. How much would you pay today for a discount bond that will pay $1,000 in one year? b. How much would you pay today for a discount bond that will pay $1,000 in five years? c. How much would you pay today for a 2% coupon bond with annual coupon payments and a face value of $5,000 that matures in three years? d. How much would you pay today for a 3% coupon bond with annual coupon payments and a face value of $5,000 that matures in three years? How much would you pay today for a 1% coupon bond with annual coupon payments and a face value of $5,000 that matures in three years? f. How much would you pay today for a 2% coupon bond with annual coupon payments and a face value of $5,000 that matures in twenty-five years? e. 4. Suppose environmental economists estimate that 100 years from now climate change will impose a one-time cost on society of five trillion dollars. Congress proposes spending one trillion dollars today on actions which it is known with certainty will completely eliminate the five trillion dollar cost. Sunneen the relevant discount rate is 3%. Should Coneress authorize spending the one trillion