Solution-How much will you have to save each year

How much will you have to save each year

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Q1. Assuming that the annual interest rate is 7%, how much would you pay to receive $100 every year, growing at 5%, annually, forever?

Q2. What is the future value three years from now of $1000 invested in an account with a stated annual interest rate of 8%, if compounded semi-annually?

Q3. What is the future value three years from now of $1000 invested in an account with a stated annual interest rate of 8%, if compounded monthly?

Q4. You want to retire a millionaire when you are 65. Currently, you have $20,000 in savings and are 30 years old. How much will you have to save each year for the next 35 years in order to have $1,000,000? Assume you earn 9% on your savings every year.

Q5. You want to lease a set of golf clubs from Holes, Ltd. The lease contract is in the form of 24 equal monthly payments at a 12 percent, compounded monthly. Since the clubs cost $4,000 retail, Holes wants the present value of the lease payments to equal $4,000. Suppose you first payment is due immediately. What will your monthly lease payment be?

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How much will you have to save each year

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