1. Assume a nominal interest rate on one-year U.S. Treasury Bills of 2.60% and a real rate of interest of 1.00%. Using the Fisher Effect Equation, what is the approximate expected rate of inflation in the U.S. over the next year?
2. Suppose you receive annuity due of $400 per year for 9 years. The interest rate is 5% compounded annually. What is the current value of this stream of payments?
3. Sally obtains a one year loan of $3000 based on an interest rate of 12% compounded annually. what would be the monthly payment to pay it off in 1 year ?