WEEK THREE

1.) (Future value) Sarah Wiggum would like to make a single lump-sum investment and have $1.6 million at the time of her retirement in 34 years. She has found a mutual fund that expects to earn 7 percent annually. How much must Sarah invest today? If Sarah earned an annual return of 16 percent, how much must she invest today?

a. If Sarah can earn 7 percent annually for the next 34 years, how much will she have to invest today? (Round to the nearest cent.) Answer:

b. If Sarah earned an annual return of 16 percent, how much must she invest today? (Round to the nearest cent.) Answer:

2.) (Solving for r in compound interest) You lend a friend $14,000, for which your friend will repay you $88,000 at the end of 14 years. What interest rate are you charging your friend?

The interest rate you are charging your friend is %. (Round to two decimal places.) ANSWER:

PLEASE ANSWER EACH QUESTION CORRECTLY AND FULLY!!!