# ASSUME COMPOUND INTEREST EXCEPT WHERE NOTED 1. AT A 7% ANNUAL INTEREST RATE, \$2000 NOW IS EQUIVALENT

ASSUME COMPOUND INTEREST EXCEPT WHERE NOTED 1. AT A 7% ANNUAL INTEREST RATE, \$2000 NOW IS EQUIVALENT TO HOW MUCH MONEY TEN YEARS FROM NOW? 2. IF \$1200 IS DEPOSITED AT THE END OF EACH MONTH IN A SAVINGS ACCOUNT THAT PAYS 1.5 % INTEREST PER MONTH STARTING ONE MONTH FROM NOW, HOW MUCH MONEY WILL BE IN THE ACCOUNT AT THE END OF FIVE YEARS? 3 TO RAISE MONEY FOR A NEW HOME, YOUR DAUGHTER ASKS YOU TO LEND HER SOME” MONEY. SHE OFFERS TO PAY YOU S80,000 AT THE END OF FOUR YEARS. HOW MUCH SHOULD YOU LOAN HER NOW IF YOU WANT TO RECEIVE 4% INTEREST PER YEAR? 4 A FUND ESTABLISHED TO PRODUCEA DESIRED AMOUNT OF MONEY AT THE END OFA GIVEN TIME PERIOD, BY MEANS OF SERIES OF PAYMENTS THROUGHOUT THE PERIOD IS CALLEDA SINKING FUND. A SINKING FUND IS TO BE ESTABLISHED TO ACCUMULATE MONEY TO REPLACE A \$10,000 MACHINE. IF THE MACHINE IS TO BE REPLACED AT THE END OF 8 YEARS HOW MUCH MONEY SHOULD BE DEPOSITED IN THE SINKING FUND EACH YEAR, STARTING IN YEAR 1? USE AN INTEREST RATE OF 6%. 5. AN INDIVIDUAL IS CONSIDERING THE PURCHASE OF AN USED AUTO- MOBILE. THE TOTAL PURCHASE PRICE IS \$7800. WITH A \$1500 DOWN PAYMENT AND THE BALANCE PAID IN 48 EQUAL MONTHLY PAYMENTS AT AN INTEREST RATE OF 1% PER MONTH, COMPUTE THE MONTHLY PAYMENT. THE PAYMENTS START IN THE FIRST MONTH AND ARE DUE AT THE END OF EACH SUCCESSIVE MONTH. 6. A RETIREMENT FUND EARNS 1.0% INTEREST COMPOUNDED QUARTERLY IF \$ 500 IS DEPOSITED EVERY 3 MONTHS FOR 20 YEARS, THE AMOUNT IN THE FUND AT THE END OF 20 YEARS IS NEAREST TO: c. \$100,000 . \$ 50,000 d. \$125,000 b. \$75,000