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1 (Solving for i) You've run out of money for college, and your college roommate has an idea for you. He offers to lend you $14,000, for which you will repay him $36,633 at the end of 7 years. If you took this loan, what interest rate would you be paying on it? If you took this loan, the interest rate you would be paying on it is %. (Round to two decimal places.) 2 (Present-value comparison) You are offered $120,000 today or $300,000 in 10 years. Assuming that you can earn 14 percent on your money, which should you choose? If you are offered $300,000 in 10 years and you can earn 14 percent on your money, what is the present value of $300,000? $(Round to the nearest cent.) Which offer should you choose? (Select the best choice below.) O A. Choose $300,000 in 10 years because its present value is higher. O B. Choose $120,000 today because its present value is higher. 3 (Calculating an EAR) After examining the various personal loan rates available to you, you find that you can borrow funds from a If you can borrow funds from a finance company at 9 percent compounded semiannually, the EAR for the loan is %. (Round to two decimal places.) If you can borrow funds from a bank at 10 percent compounded annually, the EAR for the loan is%. (Round to two decimal places.) Based on the findings above, which alternative is more attractive? (Select the best choice below.) O A. The loan from the bank at 10% compounded annually OB. The loan from the finance company at 9% compounded semiannually 4 (Future value of an ordinary annuity) What is the future value of $490 per year for 9 years compounded annually at 10 percent? The future value of $490 per year for 9 years compounded annually at 10 percent is $. (Round to the nearest cent.) 5 (Present value of an ordinary annuity) What is the present value of $3,500 per year for 9 years discounted back to the present at 9 percent? The present value of $3,500 per year for 9 years discounted back to the present at 9 percent is $. (Round to the nearest cent.)

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