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 $3,500 in an account bearing interest at the rate of 10 percent per year. What will be the future value of your investment in six years?

2. Your best friend won the state lottery and has offered to give you $11,000 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 8 percent annual interest. What is the present value of your friends future gift?

3. In four years, you would like to buy a small cabin in the mountains. You estimate that the property will cost you $62,500 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 4 percent per year in order to accumulate the $62,500 purchase price?

4. You have estimated that your educational expenses over the next three years will be $14,000 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 6 percent per year.

Future Value and Present Value Tables Table 1 Furn Hue d.001 + | 1 114 17.19 2002 h Table II Future Value of a Series of Todos (1 + n -1 Table IV Present Value of Series of 11,00 cash flows -- 1800 479 0.81 07 2241 21 | 24 2745 29 26 25 243 5.2 43 | 10.11 3339 3078 29 | 43 4.00 37 3566 3463 336 3.184 301 16:30 684 618 58 519 43 45 412 3851 37.5 36 3.87 5 4900 40 40 3.92 3760 36 3.2 8244 7.2 AM 0 5 5 61 2 3 324 03:24 70 : 996 ABS3 10563 9286 17.22 13.76 128 1427 86 7 km 5547 499 4534 4 160 396 38 3.80 3.32 | 19793 15.046 1% 9.79 8244 7.16 68 5588 499 454 4166 38