1.Adrian Brady would like to save at least $20,000 and have it ready two years from now to pay for his anticipated wedding party to which he plans to invite all his and his fiancs relatives and friends. Assuming that he can invest the money at an annual rate of 6% per year (compounded monthly).

How much does he need to save in bank each month (starting one month from now with the last deposit made two years from now) in order to have the $10,000 two years from now?

What is the effective annual rate that Adrian will earn on his deposits?

2. Audrey Murphy has just decided to start saving money early so that she could retire 30 years from now. She would like to have accumulated $4.5 million upon retirement. How much does she need to set aside each year (starting at the end of year one) to have that sum 30 years from now assuming the earning power of her money is 8% per year (compounded annually).

3. Your aunt has just asked you to help her figure out how much she needs to have saved upon her retirement so that she will be able to spend $36,000 at the end of each year after retirement for 20 years. Assuming that throughout that 20-year period your aunt can earn an average of 7% per year on her money, how much should you tell your aunt she needs to have set aside upon retirement?

4. Upon learning that his nephew will be the first member in the family to go to college, John Keegans rich uncle was so moved that he committed to cover all of the costs. Johns uncle asked him to come up with an estimate of how much he needs to be set aside today so that he will cover all his college costs. John found out that he will need $ 30,000 per year for four years starting exactly one year from today. Assuming that he can earn 8% rate of interest per year, John asked you to estimate of how much money he needs to ask from his uncle. What should be your answer to John?

5. Adam Marcs, who graduated from high school last year and could not go to college for lack of funds, has just inherited $60,000 dollars from a distant relative. He decided to use the money for college education. He found that the college he likes the most would cost $32,000 per year for four years. He decided to postpone college, invest his inheritance and work for three years and then use the inherited money and his savings to finance his college education. If we assume that Adam can earn 6% per year on his investments and savings, how much should Adam save every year (starting at the end of the current year) to meet all his college expenses assuming that the $32,000 per year in college cost is paid upfront each year starting at the end of year three?

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