Your car dealer is willing to make a loan to you for a new c…

Your car dealer is willing to make a loan to you for a new car. The loan terms are monthly payments of $400 for 5 years. The payments are due on the first day of each month starting with the day you sign up for the loan. If your cost of money is 5% APR, how much can you borrow?

An insurance company promises to pay Jane $1 million on her…

An insurance company promises to pay Jane $1 million on her 65th birthday in return for a one-time payment of $150,000 today (Jane just turned 30). At what rate of interest would Jane be indifferent between accepting the company’s offer and investing the premium on her own?