1. Would you rather have a savings account that paid 4 percent interest, compounded on a monthly basis, or one that compounded interest on an annual basis. Why?
2. The interest on your home mortgage is tax deductible. Why are the early years of the mortgage more helpful in reducing taxes than in the later years?
3. How are the present value and future value related?
4. List and describe the purpose of each part of a time line with an initial cash inflow and a future cash outflow. Which cash flows should be negative and which positive?