1. What amount should be deposited in a bank account today if a balance of $1,000 is desired five years from today, assumed to earn interest at 3%?
2. AJA Company earns 9% on an investment that will return $600,000, 7 years from now. What is the amount AJA should invest now to earn this rate of return? What is the answer if the interest is compounding twice a year?
3. On January 1, 2012, Brown Corp. purchased 200 of the $1,000 face value, 9%, 10-year bonds of Wake Inc. The bonds mature on 1/1/22, and pay interest annually beginning 1/1/13. Brown purchased the bonds to yield 11%. How much should Brown pay for the bonds?