Assume you are planning to invest 5000 each year for 6

Question

1. Assume you are planning to invest $5,000 each year for 6 years and will earn 10% per year. Determine the future value of the annuity if your first $5,000 is invested at the end of the first year.
2. What is the present value of a loan that calls for the payment of $500 per year for 6 years if the discount rate is 10% and the first payment will be made one year from now? How would your answer change if the $500 per year occurred for 10 years?
3. Determine the annual payment on a $500,000, 12% business loan for a commercial bank that is to be aromatized over a 5 year period.
4. Determine the annual payment on a $15,000 loan that is to be amortized over a 4 year period and carries a 10% interest rate. Also prepare a loan amortization schedule for this loan.
5. Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan's 8 year life.

• How much could this loan be sold for to another bank if loans of familiar quality carried an 8.5% interest rate? That is, what would be the present value of this loan?
• Now, if the interest rates on other similar quality loans are 10%, what would be the present value of this loan?
• What would be the present value of the loan if the interest rate is 8% on similar-quality loans?