Questions and Problems 5.1 Future value: Chuck Tomkovick is planning to invest $25,000 today in a mutual fund that will provide a return of 8 percent each year. What will be the value of the investment in 10 years? Future value: Your aunt is planning to invest in a bank CD that will pay 7.5 percent interest compounded semiannually. If she has $5,000 to invest, how much will she have at the end of four years? 5.6 Future value: Your birthday is coming up and instead of other presents, your parents promised to give you $1,000 in cash. Since you have a part time job and thus don't need the cash immediately, you decide to invest the money in a bank CD that pays 5.2 percent, compounded quarterly, for the next two years. How much money can you expect to earn in this period of time? 5.9 Present value: Roy Gross is considering an investment that pays 7.6 percent, compounded annually. How much will he have to invest today so that the investment will be worth $25,000 in six years? 5.10 Present value: Maria Addai has been offered a future payment of $750 two years from now. If she can earn an annual rate of 6.5 percent, compounded daily, on her investment, what should she pay for this investment today? 5.12 Present value: Tracy Chapman is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $35,000 for the down payment. If Tracy can invest in a fund that pays 9.25 percent annual interest, compounded quarterly, how much will she have to invest today? 5.15 Interest rate: You are in desperate need of cash and turn to your uncle, who has offered to lend you some money. You decide to borrow $1,300 and agree to pay back $1,500 in two years. Alternatively, you could borrow from your bank that is charging 6.5 percent interest annually. Should you go with your uncle or the bank? 5.16 Number of periods: You invest $150 in a mutual fund today that pays 9 percent interest annually. How long will it take to double your money