1. What is the possible amount you’d have to invest in a savings account at the beginning of each year to have $40,000 at the end of 8 years?

a) $5,000

b) $46,800

c) $8,400

d) $4,200

2. You calculated an ordinary annuity with n=5 and payments = $2,000 to have a present value of $10,000. You must have made an error and used a discount rate of:

a) 2%

b) 5%

c) 0%

d) 10%

3. You buy a car for $50,000, and your first monthly payment reduces the principal balance of your loan to $49,245.84. What is the possible amount of the principal reduction that takes place as a result of your second monthly payment?

a) $756.67

b) $750.22

c) $752.60

d) $754.16