1. If I want $500,000 in 10 years, how much must I deposit today, assuming an 8% interest rater 2. I am going to receive $15,000 a year for the next 10 years as a bonus. What is that worth today, assuming a 10% interest rate? 3. You plan to retire in 20 years. Is it better for you to save $25,000 a year for the last 10 years before retirement or $15,000 for each of the 20 years? You are able to earn 10 percent interest on your investments. 4. You want a retirement fund of $500,000 when you retire in 20 years. You are able to earn 10 percent on your investments. How much should you deposit each year to build the retirement fund that you want? 5. On January 1, 2006, Vigeland Company completed the following transactions (assumicu percent annual interest rate): a. Bought a delivery truck and agreed to pay $30,000 at the end of three years. What is the cost of the truck that should be recorded at the time of purchase? RAM b. Established a savings account by depositing a single amount that will increase to $40,000 at the end of seven years. What single amount must be deposited in this account on January 1, 2006? C. Decided to lease a certain property for 10 years at the following annual rentals, payable at the end of each year. The interest rate is 10%. a. Years 1 and 2 - $1,000 per year b. Years 3 to 6 - $2,000 per year c. Years 7 to 10 - $2,500 per year What is the present value of the lease? 6. Justin Nikolich bought a car for $4,500, and agreed to pay for it in 12 equal monthly installments with interest of 12% per year. What is the monthly payment? 7. Lynn Downey has $500 to invest. She wants to know how much it will amount to if she invests it at: 1. 6% per year for 20 years? 2.8% per year for 15 years? 8. Marshall Bennett wishes to have $15,000 at the end of 8 years. How much must he invest today to accomplish this purpose at an interest rate of 6% per year? 9. Chris Nix invests $20,000 at 8% annual interest (compounded annually), leaving the money invested (without withdrawing any interest) for 8 years. At the end of 8 years, Chris withdrew the accumulated amount of money. 1. Compute the amount of money Chris was able to withdraw. 2. Compute the amount of money Chris would be able to withdraw, if interest was compounded semi-annually (twice a year). 10. Daniel Adam needs $200,000 in 10 years. How much must he invest at the end of each year, at 11% interest, to meet his needs
