Reference no: EM133106114

Questions -

Q1. Kyle has $700 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate of deposit (CD) so that he will have a down payment on a car when he graduates from college in five years. His bank will pay 2.7% per year, compounded annually, for the five-year CD. How much will Kyle have in five years to put down on his car?

Q2. Luis wants to know how much he will have available to spend on his trip to Belize in three years if he deposits $3,900 today at an interest rate of 2%.

Q3. Cheryl wants to have $5,000 in spending money to take on a trip to Disney World in three years. How much must she deposit now in a savings account that pays 9% per year to have the money she needs in three years?

Q4. Winners of the Georgia Lotto drawing are given the choice of receiving the winning amount divided equally over 18 years or as a lump-sum cash option amount. The cash option amount is determined by discounting the annual winning payment at 8% over 18 years. This week the lottery is worth $21 million to a single winner. What would the cash option payout be?

Q5. Michelle is attending college and has a part-time job. Once she finishes college, Michelle would like to relocate to a metropolitan area. She wants to build her savings so that she will have a "nest egg" to start her off. Michelle works out her budget and decides she can afford to set aside $180 per month for savings. Her bank will pay her 2% per year, compounded monthly, on her savings account. What will be Michelle's balance in five years?

Q6. Lena has just become eligible to participate in her company's retirement plan. Her company does not match contributions, but the plan does average an annual return of 15%. Lena is 40 and plans to work to age 65. If she contributes $210 per month, how much will she have in her plan at retirement?

Q7. Stacey would like to have $1 million available to her at retirement. Her investments have an average annual return of 9%. If she makes contributions of $290 per month, will she reach her goal when she retires in 39 years?

Q8. Kirk can take his $650 income tax refund and invest it in a 36-month certificate of deposit at 8%, compounded monthly, or he can use the money to purchase a home entertainment system and put $19 a month in a bank savings account that will pay him 7% annual interest. Which choice will give him more money at the end of three years?