1. A young graduate looks to save money to buy a house 7.00 years from today. He is somewhat conservative and will invest his money in a bond fund that pays 5.00% annually. The graduate invests $10,688.00 today. How much will his account be worth in 7.00 years?
2. A carpenter sets aside $245,100.00 today to renovate a house in a historic neighborhood. If the housing market is good, he expects to sell the house for $389,450.00 in 2.00 years. However, if the housing market is bad, he will only be able to sell the house for 282,250.00. What interest rate (or return on his investment) will the carpenter earn if the housing market is good?
3. An engaged couple agrees to get married once their savings equal $55,600.00. They have $28,300.00 at the moment and will invest the money in an account that earns 9.00% per year. How many years will the engagement last?
4. After being drafted in the first round of the MLB draft, a star pitcher invests his signing bonus of $5,927,000.00 in a mutual fund. The fund pays on average 5.00% APR. The player will not touch this money until he retires from the league in 20.00 years. How much will this “nest egg” be worth at retirement?
5. A married couple will buy a beach house once their savings equal $1,864,500.00. They have $995,800.00 at the moment and will invest the money in an account that earns 9.00% per year. How many years before they purchase the beach house?