Answer the following questions:

1. How could you apply the phrase "a dollar today is worth more than a dollar tomorrow" to the context of your personal life? (5 points)

2. Explain the difference between simple interest and compound interest. (5 points)

Part ii

Find the required value for each problem. Show the formula used and the computations for each problem.

1. Carmen Seplveda is planning to invest $ 35,000 today in a mutual fund that provides a yield of 8.5% compounded annually. What will the investment be worth in ten years? (5 points)

2. Jos Reynoso is investing $ 27,500 in a CD from a bank that pays 7% interest compounded annually. How much will he have earned at the end of five years? (5 points)

3. Miguel Cedeo is considering an investment that pays 7.2% interest compounded annually. How much would he have to invest today if he expects this investment to bring him $ 35,000 in five years? (5 points)

4. Elizabeth Terrier wants to accumulate $ 22,000 after 10 years. If the annual compound interest rate paid by your savings account is 8.25%, how much money would you have to deposit in your account today to reach your goal? (5 points)

5. Roberto Carlo needs to decide whether he accepts a $ 15,000 bond today or waits two years and receives $ 30,000. The CAGR she could invest in is 6%. What should Roberto do? (5 points)

6. How much more would you earn in three years if you invest $ 20,000 at a compound interest rate of 6.75%, instead of a simple interest rate of 5.75%? (5 points)

7. What would be the compound annual interest rate you would need to double your investment of $ 4,000 in three years? (5 points)

8. If your bank pays you 6% annual interest, compounded monthly, how much would you have in ten years if you invest $ 2,500 today? (5 points)

9. How much would you have to deposit today in a bank account that pays 8.25% annual interest, compounded quarterly, if you expect to have $ 15,000 at the end of five years? (5 points)

10. Suppose you invested $ 4,500 in the business that a friend of yours started and that in three years this friend returned you $ 6,700. How much was the return on your investment in your friend's business? (5 points)