1. Calculate the value in five years of $1,000 deposited in a savings account today if the account pays interest at a rate of:
a. 8 percent per year, compounded annually
b. 8 percent per year, compounded quarterly
2. A business is considering purchasing a machine that is projected to yield cash savings of $1,000 per year over a 10-year period. Using a 12 percent discount rate, calculate the present value of the savings. (Assume that the cash savings occur at the end of each year.)
3. Simpson Peripherals earned $0.90 per share in 2005 and $1.52 in 2010. Calculate the annual growth rate in earnings per share over this period.