1. An investor age 35 deposits $10000 in a fund earning 7% compound interest until retirement at age 65. Find the amount of interest earned (calculations by hand) :
    1. Between ages 35 and 45
    2. Between ages 45 and 55
    3. Between ages 55 and 65
  2. Jim loans 10000$ to Amenda immediately, 5000$ in 3 years and 1000$ in 4 years. Amenda repays Jim with two equal payments of Y $; one payment of Y at the end of the fifth year and one payment of Y at the end of the sixth year, assuming a nominal interest rate of 6%, compounded monthly.

(a) Draw a time diagram of the cash flows.

0                     1                     2                     3                     4                     5                     6

(b) Evaluate Y .

  1. Billy contracted a loan at the bank. He pays back his loan in 3 payments : the first one is $7000 made after one year, the second one of $5000 made one year and a half after he contracted the loan, and the last one, of $3000, made two years after he contracted the loan. The interest rate is i(2) = 10%. (Do not insert code in your answers)

(a) Determine the amount of the loan.

(b) If after his first payment of $7000, Billy renegotiates his loan with the bank such that he only has one payment left of $X to do, four years after he contracted the loan, with the same interest rate, what should be the value of X ?

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