1) If you invested $1000 today at a rate of 5% for five years, and periodically you withdrew the interest earned, what type of interest is calculated for during the term of the investment? 2) What is the relationship between an interest rate and a discount rate in time value of money calculations? 3) How does the element of time affect future and present value calculations? 4) With regard to a return on an investment, which of the following statements is false? 5

1) If you invested $1000 today at a rate of 5% for five years, and periodically you withdrew the interest earned, what type of interest is calculated for during the term of the investment?

2) What is the relationship between an interest rate and a discount rate in time value of money calculations?

3) How does the element of time affect future and present value calculations?

4) With regard to a return on an investment, which of the following statements is false?

5.) Which of the following factors affects the rate of return of an investment at maturity?

6) You were recently admitted to college, and your Aunt Tillie has agreed to fund the tuition for your education. The admissions representative at your college says that tuition might rise approximately 5 percent per year. Aunt Tillie has agreed to deposit a lump sum today that will cover your tuition for four years, but she needs to know the amount of the initial deposit.

Your aunt is no longer able to take care of herself, so she also wants to set aside a lump sum of money to pay her rent in an assisted-living facility for the next three years. The facility has agreed not to raise her rent, if she signs a three year lease upfront.