You have just invested $10,000 in a Certificate of Deposit (CD). You will earn a rate of 4% annually.  
The CD has  a duration (time invested) of 3 years. What amount will you have at the end of the three years?  
   
 
2) For your 21'st birthday your parents opened up an individual retirement account (IRA) for you (worst present ever).  
They put an initial deposit in of $5,000. You invest well and earn a return of 9% over the next 44 years  
until you retire. How much will be in your IRA when you retire at age 65?  

Present Value of Lump Sum  
   
3) Poor old sweet Granny has kicked the bucket. Being totally awesome though she left you an inheritance.  
You can take $ 10,000 today (age 18) or $25,000 when you turn 30. The current interest rate is 7%.  
What should you do? Show your work to support your decision.  
   
   
4) You believe you will have one million dollars when you retire in 40 years. Sounds pretty great - but what  
is that actually worth in today's dollars if the average interest rate is 6% over that time period?  
   
   
Future Value of Annuity  
   
5) You are currently 22 years old and just started your job. You plan on saving $1,200 per year  
until you retire at age 65. The rate of return you believe your investments will earn is 7%.  
How much money will you have when you retire?  
   
 
6) You want to have 2 million dollars when you retire early at age 55 (33 years from now).  
How much will you have to save each year if you can earn 8%?  
   
 
Present Value of Annuity  
   
7) Fresh off a Beer Pong Tournament win (that UST education paid off!) you slip on the ice at a friend's  
house and mangle your back. Being a great friend, you naturally sue - the insurance company offers you $50,000  
today or five annual payments of $12,000. The current interest rate is 8%.  
Which should you take? Show your work to support your decision.