Reference no: EM133108522

Question - Dr. Andra Hensley, executive director of the Eldersville Children's Museum, realizes that the museum will need to replace the air conditioning system in the building in the near future. She expects that the system will need to be replaced in six years, and that the total cost will be $72,000 (including parts, labor and warranty).

If she can invest money at 5 percent compounded quarterly, how much must she invest today to accumulate $72,000 in six years? (Note that 5 percent compounded quarterly would call for use of a rate of 1.25 percent per quarterly period.)

Suppose that Dr. Hensley believes that the museum can put aside $52,000 today to buy the new system in four years. She thinks that she will be able to invest the money at 7.20 percent compounded monthly. Determine if she will have the $72,000 she will need for the new system.

Assuming that Dr. Hensley can put aside $55,000 today and needs to have $72,000 available in four years, what annual interest rate must be earned? Use quarterly compounding.

Assume that Dr. Hensley believes that she can only earn 6 percent on the money that the Children's Museum invests. Assuming monthly compounding, how much must be put aside today to provide $72,000 in four years?

Suppose Dr. Hensley chooses to put aside money each quarter for four years to have $72,000 to replace the museum's air conditioning system at the end of the four years. Assuming the museum can earn 6 percent compounded quarterly, how much must it put aside each quarter?

Dr. Hensley is hoping to retire soon. She can put aside $210,000 today. She believes that she can earn 6 percent per year with monthly compounding and wants to have $1 million when she retires. How long will that be from now?