1. If Elaine invests $700 today in an account that pays 4% interest compounded annually, how much will she have in her account four years from today? How much will she have in eight years and 12 years from today? (Use Future Value of a Lump Sum)
2. What is the present value of $1,500 due in 14 years at a 5% interest rate? At a 10% interest rate? Explain why the present value is lower when the interest rate is higher. (Use Present Value of a Lump Sum)
3. At the end of each of the past 14 years, Elizabeth deposited $450 in an account that earned 8% compounded annually. How much is in the account today? How much would be in the account if the deposits were made at the beginning of each year (PMT Type) than at the end of each year? (Use Future Value of an Annuity)
4. Suppose your opportunity cost (interest rate/year) is 11% compounded annually. How much must you deposit in an account today if you want to pay yourself $230 at the end of each of the next 15 years? How much must you deposit if you want to pay yourself $230 at the beginning of each of the next 15 years? (Use Present Value of an Annuity)
5. Kyle invested $1,250 (present value - enter as a negative number) 10 years ago. Today, the investment is worth $3,550 (future value). If interest is compounded annually, what annual rate of return did Kyle earn on his investment? (Use Solving for r - Rate of Return- on a Lump Sum)
6. Mark wants to take a trip that costs $4,750 (future value), but currently he only has $2,260 (present value - enter as a negative number) saved. If Mark invests this money at 7% compounded annually, how long will it take for his investment to grow to the needed amount of $4,750? Round to the nearest whole number representing the number of years. (Use Solving for n - Time - on a Lump Sum)