1 Suppose you open a CD account that earns 5% annual interest compounded quarterly.
(a) Suppose you deposit $5,000 in the account. How long will it take until you have at least $8,000 in the account?
(b) Instead of depositiing a lump sum into the account, you decide to deposit $250 per quarter. How long until you have $8,000 in the account?
2. How much money do you need in a retirement account earning 8% annual interest compounded monthly to be able to withdraw $2,500 per month for 30 years?
3. Sally bought a new car by taking out a $12,000 car loan. The loan accrues 13% interest compounded monthly. Sally decides she'll pay $500 a month into the loan. How long until the loan is paid of ?