Mary Goepfrich currently has $6,500 in a money market account paying 5.45 percent annually. She plans to use this amount and her savings over the next 8 years to make a down payment on a house. She estimates that she will need $20,000 in 8 years.
• How much should she invest in the money market account each year for the next 8 years to achieve her objective?
• Assuming Mary elects not to apply the $6,500 toward the down payment on the house. How much would she need as a lump sum payment to compound to $20,000 in 8 years at 5.45 percent annual rate?