Answer each of the following independent questions. Ignore personal income taxes. Use Appendix A for your reference. (Use appropriate factor(s) from the tables provided.)

Required:

1. Suppose you invest $3,400 in an account bearing interest at the rate of 20 percent per year. What will be the future value of your investment in six years? (Round your answer to 2 decimal places.)

2. Your best friend won the state lottery and has offered to give you $10,900 in five years, after he has made his first million dollars. You figure that if you had the money today, you could invest it at 14 percent annual interest. What is the present value of your friends future gift? (Round your answer to 2 decimal places.)

3. In four years, you would like to buy a small cabin in the mountains. You estimate that the property will cost you $61,500 when you are ready to buy. How much money would you need to invest each year in an account bearing interest at the rate of 6 percent per year in order to accumulate the $61,500 purchase price? (Round your answer to 2 decimal places.)

4. You have estimated that your educational expenses over the next three years will be $13,900 per year. How much money do you need in your account now in order to withdraw the required amount each year? Your account bears interest at 10 percent per year. (Round your answer to 2 decimal places.)

Future Value and Present Value Tables 121 Futre ot a Srle d 4702727075002 778 Table I 1 11 Pret Ve erk RS