PART 1. Create a 600-750 word report, and include the following:

• Describe the role of the financial institutions and financial markets in our economy
• Differentiate between primary and secondary markets.
• Differentiate between money and capital markets.

Format your assignment consistent with APA guidelines.

PART 2. Problem sets   Problem Set – Time Value of Money

Show all calculations – you can’t receive partial credit if I don’t know how you tried to solve the problem.

1What is the future value at the end of year 8 of a $1,400 deposit at the beginning of year 1 and another $900 deposit at the beginning of year 5 if the interest rate is 5%?

2What is the present value of a $1,300 deposit at the end of year 1 and another $600 deposit at the end of year 5 if the interest rate is 7%?

3Given a 4 percent interest rate, compute the future value at the end of year 6 of deposits of $1,100, $1,200, $1,300, and $1,400 made at the beginning of years 1, 2, 3, and 4.

4What is the future value of an ordinary annuity with $850 payments over 8 years if the interest rate is 5%?

 5What is the present value of an ordinary annuity with $850 payments over 8 years if the interest rate is 5%?

6If the present value of an ordinary, 6-year annuity is $11,000 and the interest rate is 4.5 percent, what’s the present value of a annuity due with the same terms?

7Assume that you contribute $100 per month to a retirement plan for 10 years. Then you are able to increase the contribution to $300 per month for the next 30 years. Given a 6 percent interest rate, what is the value of your retirement plan after the 40 years?

8You wish to borrow $18,000 to buy a car.  The dealer offers you a 4-year loan with a 3.5 percent APR.  What is the monthly payment?

9For the loan in Question #8, how would the payment differ if you paid interest only?  What would happen when the loan matures at the end of year 4?