1. Your account pays interest at 12 percent p.a.. You deposit $ 12,382 in it today. You must have exactly $ 86,639 in the account at the end of two years. What should you do at the end of the first year (that is, what dollar amount must you deposit) to ensure this?
2. You deposit $ 9,675 in your account today. You make another deposit at t = 1 of $ 7,914 . How much will there be in your account at the end of year 1 if the interest rate is 7.8 percent p.a.?
3. If the risk-free rate of return was 4.5% and the market risk premium is 5%, what is the required market rate of return?