Susan and her spouse have saved $5,500 for a 12-day cruise vacation in Europe. The couple needs $6,500 for a "nice" cabin or $7,000 for a "luxury" cabin. If cabin prices are expected to remain constant for the next three years and Susan expects to earn 5% per year on her investments, will the couple's savings be enough to afford the "nice" cabin in three years? Can they afford the luxury cabin? Why or why not? A home improvement firm has quoted a price of $14,700 to fix up Eric's backyard. Five years ago, Eric put $12,500 into a home improvement account that has earned an average of 4.75% per year. Does Eric have enough money in his account to pay for the backyard fix-up? Your finance professor suggests that you should have $3,000,000 in your retirement portfolio before you even THINK about retiring. Recently, your aunt sold valuable California real estate and handed you a check for $387,500. (This is the amount you have after paying taxes. She is now your favorite aunt.) How much of the $387,500 must you set aside today if you invest a portion of the money at an annual rate of 7.5% and you wish to retire in 38 years with the amount suggested by your finance professor? You are saving money for a down payment on a new house. You intend to place $7,500 at the end of each year for three years into an account earning 5% per year. At the end of the fourth year, you will place $10,000 into this account. How much money will be in the account at the end of the fourth year? The furniture store offers you no-money-down on a new set of living room furniture. Further, you may pay for the furniture in three equal annual end-of-the-year payments of $750 each with the first payment to be made one year from today. If the discount rate is 5%, what is the present value of the furniture payments?