Reference no: EM132758307

Question: Shows the formulas used and the computations for each of the following exercises.

1. Jane Morrison is planning to invest $ 25,000 today in a mutual fund that provides a return of 8% compounded annually. What will the investment be worth in ten years?

2. Ramón Rivera is investing $ 7,500 in a CD from a bank that pays 6% interest compounded annually. How much will he have earned at the end of five years?

3. María Lebrón is considering an investment that pays 7.6% interest compounded annually. How much should you invest today if you expect this investment to bring you $ 25,000 in six years?

4. Elizabeth Terrier wants to accumulate $ 12,000 after 12 years. If the annual compound interest rate paid by your savings account is 9.25%, how much money would you have to deposit in your account today to reach your goal?

5. Carolina Carlo needs to decide whether to accept a $ 17,000 bond today or wait two years and receive $ 20,100. The CAGR she could invest in is 6%. What should Carolina do?

6. How much more would you earn in three years if you invest $ 10,000 at a compound annual interest rate of 5.75%, instead of at a simple interest rate of 5.75%?

7. What would be the compound annual interest rate you would need to double your investment of $ 1,000 in three years?

8. If your bank pays you 5% annual interest, compounded monthly, how much would you have in ten years if you invest $ 1,000 today?

9. How much would you have to deposit today in a bank account that pays 9.25% annual interest, compounded quarterly, if you expect to have $ 20,000 at the end of five years?

10. Suppose you invested $ 2,500 in the business that a friend of yours opened and that in three years this friend returned $ 3,700 to you. How much was the return on your investment in your friend's business?