5-16 Present value of a perpetuity what is the present value of a $100 perpetuity if the interest rate is 7%? If interest rates doubled to 14%, What would its present value be?


5-26  PV AND LOAN ELIGIBILITY You have saved $4,000 for a down payment on a new car. The largest monthly payment you can afford is $350. The loan will have a 12% APR based on end of month payments. What is the most expensive car you can afford if you finance it for 48months? For 60 months?

5-33  FV OF UNEVEN CASH FLOW You want to buy a house within 3 years , and you are currently saving for the down payment. You plan to save $5000 at the end of the first year and you anticipate that your annual savings will increase by 10% annually thereafter. Your expected annual return is 7%. How much will you have for a down payment at the end of year 3?