Promise to repay the loan in two payments

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Reference no: EM131444249

1. Assume you borrow $10,000 today and promise to repay the loan in two payments, one in year 2 and the other in year 4, with the one in year 4 being only half as large as the one in year 2. At an interest rate of 10% per year, the size of the payment in year 4 will be closest to:

a. $4280

b. $3975

c. $3850

d. $2335

2. An engineer planning for retirement decides that she wants to have income of $100,000 peryear for 20 years with the first withdrawal beginning 30 years from now. If her retirement account earns interest at 8% per year, the annual amount she would have to deposit for 29 years beginning 1 year from now is closest to:

a. $7360

b. $8125

c. $8670

d. $9445

Reference no: EM131444249

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