1. You received $30,000 from your grandparents. You want to investment it to fund your mortgage down-payment in four years. You want to buy a house that is at least $200,000 but no more than $300,000. Normally, banks require home buyers to make 20% (of the house price) down-payment. What is the minimum and maximum interest rates that you need to earn on your investment? 2. You want to buy a Volvo in 4 years, after you graduate from college. The car is currently selling for $35,000, and the price will increase at a rate of 5% per year. Your friend, Bob, introduces to you a one-time chance to earn 14% per year over the next 4 years. And you want to grab this chance to plan for your purchase. How much do you need to invest today so that you are able to buy your dream car after graduation? 3. Your great aunt invested $10,000 in an account in your name several years ago. The account has paid an average annual rate of 6.8 percent. Today, the account is worth $85,393. How long ago was this money invested for your benefit? 4. This morning, you purchased a rare coin for $42,600. The coin has been appreciating in value at an annual rate of 6.9 percent and is expected to continue doing so. How long will it be until the coin is worth $100,000? 5. You are planning a trip around the world that is scheduled to begin 4 years from now. The estimated cost is $68,000. How much do you have to deposit today in one lump sum to fully fund this trip if you can earn 4.2 percent per year on your investment? 6. Triple Town Bank pays 3.8 percent simple interest on its savings accounts. Doubleton Bank pays 3.5 percent interest, compounded annually on its savings accounts. Sixteen years ago, Jake invested $2,000 in each bank. What is the difference, if any, in his account balances today? 7. According to the Rule of 72, what rate of interest must you earn to double your money in 5 years? 8. Which one of the following relationships is correct, all else held constant? a. The future value and the present value are inversely related. b. The future value increases as the interest rate decreases. c. The present value is directly related to the time period. d. The interest rate and the time period are inversely related. 9. Two years ago, a certain wooded area contained 100 groundhogs. If the population of these animals increase at an annual rate of 120 percent, approximately how many groundhogs are in the wooded area today? 10. Assume one year of college costs $38,000 today. If these costs increase at an annual rate of 6.9 percent, what will one year of college cost 20 years from now?