1) A student needs to borrow $3500 for living expenses for a study-abroad program in Hong Kong. She feels that she will be able to pay back only $3750 in 7 months after she works in the summer. What is the highest interest rate she is able to pay?
2) Use intuition to decide which of the following you would prefer: (a) a salary of $35,000 per year with no raises for 10 years or (b) a salary of $32,000 per year with annual raises of 3% per year of each of the next 10 years. Explain the reason for your choice.
3) If an organization needs to have $1,000,000 in 10 years. How much should it invest now if it can draw 8.5% compounded semiannually?
4) Joe invested $25,000 in an account that will draw 6.9% interest compounded quarterly for the next 10 years while Susan invests $25,000 in an account that will draw 6.8% interest compounded continuously over the next 10 years. Who will have the most money at the end of the 10 years?
5) What is the effective interest rate for 8% interest compounded daily?