1. What is the future value of $1,500 invested today for 8 years, compounded annually at 7.2%? (10 points)
2. You are planning to purchase a new car in 5 years, which you estimate will cost $30,000. You currently have $18,900. What rate of interest (compounded annually) must you earn in order to reach your financial goal? Please round your answer to the nearest hundredth. (10 points)
3. Find the future value of the following ordinary annuity, compounded annually: $1,000 per year for 10 years at 7.5% interest. Please round your answer to the nearest penny. (10 points)
4. Rework the previous problem assuming it is an annuity due. (10 points)
5. Hydro Air Inc., bonds have 12 years left to maturity. Interest is paid annually; they have a $1,000 par value; the coupon interest rate is 6% and the yield to maturity, or market interest rate, is 4%. Please calculate the current market price of the bond. (15 points).
6. Steamroller Blues Carpet Cleaning Company bonds have 15 years left to maturity. Their par value is $1,000, the coupon interest rate is 8%; the market interest rate is 10% and interest is paid semi-annually. How much would you be willing to pay for this bond? (15 points)
7. He Gone, Inc., bonds have 4 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 9%.
A. What is the yield to maturity at a current market price of $829? (10 points)
B. What is the yield to maturity at a current market price of $1,104? (10 points)