Question 1. John started a paper route 1/1/95. Every three months, he deposit $500.00 in his bank account. The account earns 4% annually but is compounded quarterly. On 12/31/98, he used the entire balance in his account to invest in a contract that pays 9% annually. How much will he have on 12/31/01?
Question 2. Joe invests $50,000 in a project that is expected to yield a return of 8% compounded semi-annually over the next 5 years. He will then take the proceeds & provide himself with a 10 year annuity. Assuming a 10% annual interest rate, how much will the annuity be?
Question 3. Sue will receive 12,000 a year for the next 15 years as a result of her patent. Using a 9% rate, should she be will to sell her future rights now for $100,000.
Question 4. If you owe $40,000 payable at the end of seven years. How much should your creditors be willing to accept if they could earn 12%.