1. Let's suppose an individual is looking to purchase a home in a few years. They would like to have $50,000 available for a down payment. If the current rate of return is 8%, how many years will it take to accumulate $50,000 for the down payment if a single payment of $10,000 is invested today? If they wished to have the $50,000 available in 3 years, what additional monthly payment would they need to make on top of the $10,000?
2. You charged $1,000 on your credit card for Christmas presents. Your credit card company charges you 26% annual interest, compounded monthly. If you make the minimum payments of $25 per month, how long will it take (to the nearest month) to pay off your balance?