1. Cecilias grandfather set up a savings account for her with a $25,000 gift when she was born. The account accumulated interest annually at a rate of 6% per year and no other deposits were made to the account. Cecilia is 21 years old today. To date, how much has accumulated in the account?
2. Wades company needs to have a lump-sum deposit of $200,000 for the purchase of a piece of equipment in 2 years. He wishes to deposit a sum of cash into an account paying 4% per year compounded on a monthly basis. How much will he need to deposit into this account to have enough to purchase the equipment?
3. Julie and Miguel just got married and are planning on an anniversary cruise for their fifth year anniversary. They estimate the trip will cost $10,000. How much should they deposit to have enough(in 5 years)in savings to pay for the cruise, assuming a 4% interest rate annually?
4. You know you will receive a $12,000 bonus each year for the next three years. You plan to save it for your first home down payment. How much will you have in the account at the end of 3 years if you earned 3% annually?
5. Santiago plans to save for a vacation to Brazil in 1.5 years. He will be putting the money into a short-term investment account earning 4% compounded monthly. How much will Santiago have to put away at the beginning of each month if the total package cost for the trip is $3,500?
6. Margaret purchased a collection of stamps for $6,500. Today she sold the stamps for $12,600. Margaret estimated her average opportunity cost on the stamps was 12.5% (compounded monthly). Approximately how many years did she own the stamps?
7. Three years ago, Brian borrowed $1,800 from his parents to pay off his credit card debt. Brian won the lottery and decided to pay his parents back a total of $2,500. What is the average interest rate of the loan from Brians parents?
8. Carol just purchased a home for $400,000 and paid 30% as a down payment? She financed the balance over 30 years at 4.75%. She makes monthly payments. What are the payments? How much interest will she pay over the life of the loan?
9. You need to accumulate $1,000 in 5 years. If you can afford to invest $150 at the end of each year, what rate of return will be required to reach your goal?
10. You want to purchase a $23,000 car when you graduate in 3 years. You just received a substantial inheritance of $15,000 and want to put it in an account that earns 8% annually to purchase the car in 3 years. Will you have enough to cover the cost of the car when you graduate? If so, how much extra will you have? If not, how much do you need?
11. A manufacturer offers you 6 payments of $800 per year for rights to your invention. Using a 7% discount rate with the first payment due immediately, how much cash would you accept right now in lieu of the annual payments?
12. Fran is starting a savings program. She will deposit $1,000 annually with the first payment made today. If she earns 10%, how long will it take to accumulate $7,000? Dont forget to change your calculator to beginning mode.