1. If you borrow $10,000 for 8 months at 6%, how much interest must you pay?
2. The current annual interest rate is 3%. You buy a car for $25,000 with full payment due in 6 months. What is the opportunity cost to the seller?
3. A loan is completely renegotiated every 6 months. Determine the monthly interest due per $1000 if the interest rate is 5%.
4. You have negotiated to pay the seller of a house $300,000 2 months from now. The current interest rate is 4%. How much would you offer to pay for the house if you could close on the deal today?
5. A person spends $60.00 on a manicure every month and $80.00 on a massage every quarter. If these luxuries were deferred, and the money deposited in a money market fund with 2% annual interest rate, how much would you have after 10 years?
6. You have deposited $100 per month in an account for 10 years. At the end of 10 years, you find that you have $18,000 in the account. What was the annual rate?
7. On your 40th birthday, you decide to put $500 every quarter into an account with interest compounding quarterly at 3% for a period of 20 years. You anticipate taking the balance at age 60 to deposit into a mutual fund with 2% interest compounded annually for 7 years. Every year, you add $1000 cash to the mutual fund. How much will you have at age 67? Show formulas
8. At 20 year $10,000 bond with a 6% coupon rate was issued 5 years ago and is now available for purchase. The current rate for similar bonds today is 4%. How much is the bond worth?