Reference no: EM132651161

1. What is the future value of $200 invested for seven years at eight percent annual interest?

2. What is the future value of $350 invested for five years at nine percent annual interest?

3. Mr. Al B. Tross would like to get ahead in life just once. To that end, he is going to follow one of his famous hunches by investing $50,000 into a high-risk commodities fund, which is supposedly earning 17 percent annually. If his hunch pays off, how much will Mr. Tross have at the end of his ten-year investment horizon?

4. Mr. and Mrs. Tuckentoast invested $4,000 in a money market mutual fund, which is currently paying 3.5% annual interest. They plan on leaving their money invested for eight years. What will be the value of Mr. and Mrs. Tuckentoast's money at the end of their eight-year investment horizon if interest rates remain as they are?

5. Mr. and Mrs. Thrifty are planning for retirement. They expect to contribute $100,000 now toward their goal of $350,000 for when they retire in 15 years. Mr. and Mrs. Thrifty expect their retirement portfolio to earn eight percent annually. What will their retirement portfolio be worth if all goes well?

6. Simpson Clothier, a men's haberdashery, invested $12,000 in a corporate bond mutual fund that offers a 7.7 percent annual return. They would like to have $20,000 at the end of the nine years for an expansion project. How much will their investment be worth at the end of their investment horizon?

7. Howell Publishing plans to expand its operations to the west coast in ten years at the cost of $350,000. Today their CFO invested $100,000 of the firm's money toward that goal. She expects that investment to earn 12 percent annually. How much will the firm have towards their goal at the end of their investment horizon?

8. Challenge Problem: The Weilers are saving up to buy a house. They have found the perfect bungalow with an eight-foot privacy fence to deter intruders and nosy neighbors. The asking price is $300,000, and their mortgage lender told them they would have to come up with at least 20 percent for a down payment to qualify for a conventional mortgage loan. Mrs. Weiler inherited and then invested $10,000 five years ago, and Mr. Weiler sold his Ferrari and invested the $20,000 net proceeds when they got married ten years ago. Their respective investments have been earning 10 percent annually. (a) What is the value of Mrs. Weiler's investment today? (b) What is the value of Mr. Weiler's investment today? (c) How much do they have available to purchase their dream house? (HINT: Draw this on a timeline to help solve the problem.)