2)You
are preparing to buy a vacation home five years from now. The home will cost
$80,000.00 at that time. You plan on saving three deposits at an interest rate
of 8%.

Deposit 1: Deposit $10,000.00 today

Deposit 2: Deposit $12,000.00 two years from now

Deposit 3: Deposit $ X three years from now

How much do you need to invest in year 3 to ensure that
you have the necessary funds to buy the vacation home at the end of year 5?

3)A
40-year old person wants to accumulate $500,000.00 by age 65. How much will she
need to save each month, starting one month from now, if the interest rate is
6% per year?

4)Amy
Parker, a 22- year old and newly hired marine biologist, is quick to admit that
she doesn’t plan to keep close tab on how her 401(K) retirement plan will grow
with time. This sort of thing does not interest her. Amy’s contribution, plus
that of her employer, amounts to $2200.00 per year starting at age 23. Amy
expects this amount to increase by 3% each year until she retires at age 62.
What is the compounded future value of Amy’s 4012(K) plan if it earns 7% per
year

5)Bill
borrowed $10,000.00 to be repaid in quarterly installments over the next five
years. The interest rate he is being charged is 12% per year compounded
quarterly. What is his quarterly payment?

6)Consider
the following data

Cost of asset $50,000.00 and have a useful life of 7
years, The salvage value at the end of the usefullife is 0$0.00 (zero) sing a straight line depreciation method
and double declining balance find the depreciation at each year and the book
value .

7)Consider
the following data on an asset:

Cost of asset $ 73000.00,

Useful life7
years

Salvage value
$3000.oo

Compute the annual depreciation allowances and the
resulting book values, initially using DDB and then switching to straight line
depreciation.