Reference no: EM131003651

(1) A person borrows $10,000. What amount must they repay 6 months from now when the balance is due, given a 6.5% annual rate of simple interest?

(2) If the inflation rate averages 3% per year compounded annually for the next 5 years what will currently selling for $17,000 cost 5 years from now

(3) A person with $14,000 is trying to decide whether to purchase a car now, or invest the money at 8% compounded continuously and then buy a more expensive car. How much will be available for the purchase of a car at the end of 3 years?

(4) In a suburb of Houston, housing costs have been increasing at 5.2% per year compounded annually for the past years. A house with a current value of $260,000 would have been worth how much 8 years ago?

(5) If you deposit $5,000 in a savings account now what rate compounded continuously would be required for you to withdraw $10,000 at end of 4 years?

(6) A newly married couple has $15,000 toward the purchase of a house. For the type and size of house the couple is interested in buying, an estimated down payment of $20,000 will be necessary. How long will the money have to be invested at 10% compounded quarterly to grow to $20,000?

(7) How long will it take money to double if it is invested as a single lump sum and earns interest at 6% compounded continuously?

(8) If you deposit $10,000 in a savings account now, what rate compounded monthly would be required for you to withdraw $12,500 at the end of 5 years?

(9) Bank of America offers an annuity that pays 5.5% compounded monthly. What equal monthly deposits should be made into the annuity in order to have $100,000 in 10 years?

(10) A company establishes a fund for upgrading office equipment with monthly payments of $2,000 into an account paying 6.6% compounded monthly. How long will it take for the account to have $100,000?

(11) A new luxury car costs $80,000. You pay 10% down and amortize the rest with equal monthly payments over a 7-year period. If you pay 9.25% compounded monthly what is you monthly payment? How much interest will you pay?

(12) A person saving for retirement deposits in an IRA account $400 a month compounded monthly at 8% interest for 40 years. 40 years from now when they retire they assume the money will have to last them 25 years. Given the lump sum that has accumulated in their IRA, what uniform monthly withdraws should the person take over the 25 years so the money last them, given an interest rate of 3%.