Finance Assessment III

1. After placing $8,000 in a savings account paying annual compound interest of 8%, calculate the amount that will accumulate if it is left for 8 years?

2. If you deposit $17,000 today in an account earning an annual rate of return of 10%, how much interest would be earned in the third year? How much would this amount differ from simple interest?

3. To pay for your education, you have taken out $28,000 in student loans. If you make monthly payments over 13 years at 5% compounded monthly, how much are your monthly student loan payments?

4. What is the present value of a $650 perpetuity discounted back to the present at 10%? What is the present value of the perpetuity?

5. How much do you have to deposit today so that, beginning 11 years from now, you can withdraw $9,000 a year for the next 8 years (periods 11 through 18) plus an additional amount of $18,000 in the last year (period 18)? Assume an interest rate of 6%.