1. The Good Life Insurance Co. wants to sell you an annuity which will pay you $790 per quarter for 30 years. You want to earn a minimum rate of return of 6.4 percent. What is the most you are willing to pay as a lump sum today to buy this annuity?
2. My salary in the year 2021 will be $160,000. Assuming an inflation rate of 4% over this five year period, what will my 2021 income be, stated in year 2016 dollars?
3. If the nominal interest rate on my car loan is 10% and the rate of inflation is 4%, the real interest rate on my car loan (Ignore the Fisher Effect) is:____%