Task 1

Which amount is worth more at 10 percent, compounded annually: $2,000 in hand today
or $3,500 due in 5 years?

Task 2

While you were a student in college, you borrowed $12,000 in student loans at an interest
rate of 9 percent, compounded annually. If you repay $1,500 per year, how long,
to the nearest year, will it take you to repay the loan?

Task 3

An investment pays you 15 percent interest, compounded monthly. What is the periodic

rate of interest? What is the nominal rate of interest? What is the effective rate of interest?

Task 4

An investment pays you $200 at the end of each of the next 3 years. The investment will
then pay you $300 at the end of Year 4, $500 at the end of Year 5, and $700 at the end
of Year 6. If the interest rate earned on the investment is 9 percent, what is its present
value? What is its future value?