Problem
I. You have been approached by a broker about an opportunity to save for retirement. You will receive a one-time payment at the end of Year 40 in the amount of $198,947.85. Assuming you would like an annual return of 5.6%, what is the most you should be willing to pay for this opportunity?
II. You have decided to save for retirement by putting $5000 into an account at the end of every year. You will not be starting with any money, and your investment will earn 5.6% annually with annual compounding. How much will your account be worth at the end of 30 years?
III. You have found that used Dodge Dart you have been looking for, which is currently priced at $4411.73, but you're not going to be able to buy it for 3 years. During that time, its price is expected to drop by 5% per year. In 3 years, the bank will give you a 4 year loan with monthly payments at an annual interest rate of 18%, with a 10% down payment required. What will your monthly payments be?