2. Calculating Future Values. Bucher Credit Bank is offering 5.3 percent compounded daily on its savings accounts. If you deposit $5,000 today, how much will you have in the account in five years? In 10 years? In 20 years?
3. Calculating Present Values. Suppose you are still committed to owning a $160,000 Ferrari (see Question 9). If you believe your mutual fund can achieve a 10.25 percent annual rate of return, and you want to buy the car in 10 years on the day you turn 30, how much must you invest today?
4. Calculating Future Values. You have just made your first $5,000 contribution to your individual retirement account. Assuming you earn a 10.5 percent rate of return and make no additional contributions, what will your account be worth when you retire in 45 years? What if you wait 10 years before contributing? (Does this suggest an investment strategy?)
This question was asked on Oct 25, 2011 and answered on Oct 25, 2011.
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