Discussion Question 5
#5.1
| 5.1. | Future value: Chuck Tomkovick is planning to invest $25,000 today in a mutual fund that will provide a return of 8 percent each year. What will be the value of the investment in ten years? | |
#5.12
| 5.12. | Present value: Tracy Chapman is saving to buy a house in five years. She plans to put 20 percent down at that time, and she believes that she will need $35,000 for the down payment. If Tracy can invest in a fund that pays 9.25 percent annually, how much will she need to invest today? | |
#5.15
| 5.15. | Interest rate: You are in a desperate need of cash and turn to your uncle, who has offered to lend you some money. You decide to borrow $1,300 and agree to pay back $1,500 in two years. Alternatively, you could borrow from your bank that is charging 6.5 percent interest annually. Should you go with your uncle or the bank? | |
#5.16
| 5.16. | Number of periods: You invest $150 in a mutual fund today that pays 9 percent interest annually. How long will it take to double your money? | |