1. Suppose you are expected to receive $10,000 in exactly 10 years. Find the present value under the following conditions. Assume the APR = 12%
(ii) Semi-annual compounding
(iii) Monthly compounding
2. Instead of saving for your retirement, you decide to purchase a new sports car for $40,000. Assume your first payment is one month from now and the loan is for 5 years.
(i) If the APR is 2.9%, what are your monthly payments? What is the EAR? (ii) If the APR is 9.9%, what are your monthly payments? What is the EAR?