1. Your Grandfather upon your birth invested $1000 into an account for you. The account has earned an annual rate of 16% a year. On your 21^st birthday you could withdraw the accumulated amount. How much can you withdraw?
2. Now suppose, there is $10804 in the account. What rate of return did we receive?
3. I want to have $30000 on my 21^st birthday. If I could have earned 12% a year, how much would my grandfather have had to invest in the account for me to reach $30000?
4. I want to take my family on vacation to Disneyland in three years. I believe I will need $29000 for the three weeks I plan to spend in Florida. I can earn 9% APR in my savings account at the bank. How much will I need to deposit each month to reach my goal?
5. If I deposit $750 each month, how much will I have for my vacation?
6. If I made the first deposit today, how much will I have for my vacation ($750)?
7. I just won the lottery. I won $50000000 to be paid out over the next 20 years in equal payments. If the appropriate discount rate is 8%, how much in present value did I win?
8. How much did I win if the first payment is received today?
9. My friend has a business opportunity available to him. He says that if I invest with him I will receive $1250 a month for five years from the investment. I believe that for such a risky investment I need to get at least 15% return. How much is the most I should be willing to give him?
10. If the investment is expected to last forever, how much is the most I should give him?
11. I evaluate starting a business. I believe that I will make $15000 in year 1, $12000 in year 2, $10000 in year 3 and $8000 in year 4. I believe for a risky project like this I should get at least a 14% return. What is the most I should be willing to invest?
12. If I had to only invest $20500, what rate of return would I receive?
13. I want to buy a car. I pay $506 per month for five years. The quoted APR is 6.9%. How much did I pay for the car?
14. If the best offer was $548 per month from the dealership, how much did they want for the car?
15. What is the balance on the loan after 2 ½ years, if I made every $506 payment on time?
16. How much of payment 2 is interest? How much goes to principal?
17. If I make payments of $580 per month, how long will it take me to pay off the loan?
18. If the quoted APR on my credit card is 18%, what is the effective annual rate I am paying if the compounding period is monthly? Daily?