1) Assume you are planning for your retirement. For retirement, you will deposit today (January 1, 2012) a lump sum amount in a bank paying 12.5 percent, compounded annually. You will retire after 8 years (in January 2020) and you plan on living for additional 20 years after retirement and drop dead on December 31, 2039. During your retirement, you would like to receive $50,000 per year (to be received at the first day of each year), with the first payment on January 1 2020. Moreover you want to have a total of $75,000 on your bank account on January 1, 2040, to leave for your children. How much you must deposit in the bank at 10 percent on January 1, 2012 to achieve your goal. (Show the timeline).

2) A father is planning a savings program to put his daughter through college. His daughter is now 13 and the daughter plans to enroll at the university in 5 years. She should take 4 years to complete her graduation. Currently, the cost of education is $12,500 per year, but a 5 percent annual inflation rate in these cost is forecasted. The daughter recently inherited $7,500 from her grandfather, which the father plans to invest in a bank paying 8 percent interest compound annually, to help meet the cost of the daughters education. However, the remaining cost will be met by money; the father will deposit in the savings account. He will make 6 equal deposits to the account, one deposit in each year from now until his daughter starts college. These deposits will begin today and will earn 8 percent, compounded annually. What will be the present value of the cost of 4 years of education at the time the daughter becomes 18? What will be the value of the $7,500 that the daughter received from her grandfathers estate when she stars college at age 18? If the father is planning to make the first of 6 deposits today, how large must each deposit be for him to be able to put his daughter through college?

3) A 15-year security has a price of $340.4689. The security pays $50 at the end of each of the next 5 years, and then it pays a different fixed cash flow amount at the end of each of the following 10 years. Interest rates are 9 percent. What is the annual cash flow amount between Years 6 and 15