1. If you put $1,300 into a bank account that pays 4% annual interest, how much would you have in the account after 13 years? How long (in years) would it take your money to quadruple if it earns 8% compounded quarterly?
2. An account representative (salesperson) from Southwestern Mutual (the LOUD company) offers you an investment that will return $25,000 in 6 years. If the investment costs $18,700, what is the internal rate of return of this investment?
3. Lets say youre helping someone evaluate the investment in Question 3. Assuming their RRR is 7.5% for this investment, write an appropriate recommendation for this proposed investment.
4. You want to set aside some money for a house down payment in 5 years. You expect to need $65,000 at that time. How much would you have to save today (a lump sum) to accumulate that amount assuming you earn 5.75% on your funds? Assume monthly compounding.