Solve all questions by showing the formulas.

1-You invest $3,000 in a certificate of deposit that matures after ten years and pays 5 percent interest, which is compounded annually until the certificate matures.

1. How much interest will you earn if the interest is left to accumulate?
2. How much interest will you earn if the interest is withdrawn each year?

2-A 45-year-old woman decides to put funds into a retirement plan. She can save $2,000 a year and earn 6 percent on this savings. How much will she have accumulated if she retires at age 65? At retirement how much can she withdraw each year for 20 years from the accumulated savings if the savings continue to earn 6 percent?

3-You annually invest $1,500 in an individual retirement account (IRA) starting at the age of 20 and make the contributions for 10 years. Your twin sister does the same starting at age 30 and makes the contributions for 30 years. Both of you earn 7 percent annually on your investment. Who has the larger amount at age 60?

4-An investment will generate $10,000 a year for 25 years. If you can earn 10 percent on your funds and the investment costs $100,000, should you buy it? Would your answer be different if you could earn only 7 percent?

5-Your retirement account has a current balance of $50,000. What interest rate would you need to be earned in order to accumulate a total of $1,000,000 in 30 years, by adding $6,000 annually?

6-Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). The following is a problem related to price increases.

Nancy and Pam both currently earn $100,000. If the annual rate of inflation is 4 percent, how much must each earn after ten years to maintain their purchasing power?

7-Tuition costs at various colleges vary from $15,000 to $35,000 annually. These tuitions are expected to increase over time. If the annual rate of increase is 3 percent, what will be the new range in tuition costs in ten years? If the rate doubles from 3 to 6 percent, what will be the range in tuition costs after ten years?