Assignment Problems 1. On Naomi's sixth birthday, her parents put $24,000 into an investment account that promises to pay a fixed interest rate of 8 percent per year. How much money will she have in this account when she turns 18? Round to two decimal places. 2. Joel has $3,600,000 in a Roth IRA and is ready to retire. He plans to withdraw equal amounts at the end of each year for the next 20 years. If the funds remaining in the account continue to earn 8% annually, how much can he withdraw each year? Round to two decimal places. 3. Alice would like to raise $420,000 in ten years for her son to go to college. She plans to deposit equal amounts into an account at the end of each year earning 13% annually. How much must she invest each year if the first deposit is made at the end of the first year? Round to two decimal places. 4. You deposited $1,000 into your savings account twelve years ago. Today, the amount has doubled to $2,000. What annual rate of interest did your account generate? Submit your answer as a percentage and round to two decimal places. 5. Abner Corporation takes out a $200,000 loan for a piece of new machinery. The annual payments are $21,878.23. If the loan accrues 7.5% interest per year, how many loan payments must the company make? Round to the nearest number of years. 6. Harley invested $5,000 into various stocks and bonds exactly nine years ago. During that time, her account earned an average rate of return of 9.5% per year, compounded monthly. How much is her account worth today? Round to two decimal places. 7. Jamie plans to retire in 30 years. She decides to put $200 into a Roth IRA at the end of every month starting at the end of this month. She expects the IRA to earn 12% per year compounded monthly. How much will she have accumulated in the account at the end of 30 years? Round to two decimal places. 8. Durran has recently acquired a rare art piece that he plans to put on display in his private collection. He estimates that revenues generated from donations and admissions tickets to see the new exhibit will be $19,000 per year for the next six years. If he requires a rate of return of 4%, how much are the expected cash flows worth for him today? Round to two decimal places. 9. Luke wants to save up $2,000 in two years for a new computer. He can invest in a fund earning a 16% rate of return, compounded monthly. How much must he deposit into the fund today to have the necessary funds in two years? Round to two decimal places. 10. Cillian takes out a payday loan for $400. In one month, he must pay back the loan plus $50 in interest. Assuming monthly compounding, what is the annual interest rate (APR) he is being charged? Submit your answer as a percentage and round to two decimal places
