1. Calculate the present value of a loan with $25,000 due after 12 years at 6% if the interest was compounded monthly. (the present value is the same as the principal amount of the loan). Discuss how the present value of a compounded loan changes as you increase time?
2. You want to put money in the stock market todayto pay for your child's college costs.
She will be going to to college in 18 years and you want to have $250,000 saved by then. You expect to earn 8% in the market.
How much do you need to invest now?