9.2 You believe that you can set aside $1,500 each year for…

9.2 You believe that you can set aside $1,500 each year for the next four years, starting immediately, in order to start your small business. Your friend Bob promises that he’ll pay you back $5,000 that he owes you three years from now, so you will add that to the payment you make at the start of year 4. Then, at the start of year 5, you will increase your payment to $1,500; in year 6, to $1,600; and in year 7, to $1,700. Every payment will be deposited in a fund bearing 4% interest compounded annually. How much will you have set aside for your boat at the end of the seventh year?

7.9 Bauer Bookstore sells books before they are published. T…

7.9 Bauer Bookstore sells books before they are published. Today, they offered the book Journeys in Finance for $14.00, but the book will not be published for another two years. Upon publishing, the price of the book will be $25.00. What is the discount rate Bauer Bookstore is offering its customers for this book?

9.7 You hire Jen for a three-year term. She has no retiremen…

9.7 You hire Jen for a three-year term. She has no retirement plan, so you agree to invest money immediately to allow her a stream of three payments beginning one year after her employment term ends. Draw a timeline! The money you invest for the full six years of this arrangement (three years of employment and three years of withdrawals) always earns 6% compounded annually. When Susan receives her third and last payment, the fund will be depleted and equal zero. The three payments she will receive are as follows: End of year 4: $25,000 End of year 5: $30,000 End of year 6: $37,000 Therefore, your goal is to have enough money in this account at the end of Susan’s three-year employment term to assure her of receiving these payments. How much money must you invest today to accomplish this strategy?