# Five years ago, you bought a piece of art at auction for \$1.2million. Yesterday, you sold that piece

Five years ago, you bought a piece of art at auction for \$1.2million. Yesterday, you sold that piece at auction for\$2,630,937.64. You also purchased a new piece yesterday for\$300,000. If the piece you just bought earns the same rate ofreturn as the first one, how much will you be able to sell it forin 8 years? You plan to save for a Caribbean cruise. You deposit\$500 today, \$250 in two years, and \$1,000 in three years. If yourinvestment account earns 9 percent per year, how much will you havein five years? 7. Which do you prefer: (1) receiving \$1,000 in fiveyears when the interest rate is 3 percent per quarter or (2)receiving \$1,500 in six years when the interest rate is 6 percentevery six months? You have won a lawsuit and the court has arrangedfor the defendant to pay you \$7,500 per year for the next threeyears. If the appropriate discount rate is 8 percent, what is thevalue of your settlement today? Last year, you borrowed money fromCousin Vinnie and he agreed to a 25 percent interest rate per year.If you borrowed \$250, and know you have to pay him in full exactly\$488.28 (and make no other payments to him), what will be the totallength of the loan? An investment offers a return of 1 percentevery month if you deposit a minimum of \$20,000. If you make theminimum deposit today and do not make any additional deposits, howmuch will you have in your account in 20 years? . . .