1) (Future value) Sarah Wiggum would like to make a single lump-sum investment and have $1.6 million at the time of her retirement in 34 years. She has found a mutual fund that expects to earn 7 percent annually. How much must Sarah invest today? If Sarah earned an annual return of 16 percent, how much must she invest today?
a. If Sarah can earn 7 percent annually for the next 34 years, how much will she have to invest today? (Round to the nearest cent.)
b. If Sarah earned an annual return of 16 percent, how much must she invest today? (Round to the nearest cent.)
2) (Solving for r in compound interest) You lend a friend $14,000, for which your friend will repay you $88,000 at the end of 14 years. What interest rate are you charging your friend?
The interest rate you are charging your friend is %. (Round to two decimal places.)