1. Some time ago, Bob bought some land costing $24 thousand. Today, that same land is valued at $65 thousand. How long, in years, has Bob owned this land if the price of land has been increasing at 7.16 percent per year?
2. Assume the total cost of a college education will be $355,961 when your child enters college in 20 years. You presently have $40,062 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child’s college education?
3. Twenty years ago, you deposited $6,832 into an account. Fifteen years ago, you added an additional $9,701 to your account. You earned 5.15 percent, compounded annually, for the first 5 years and 8.26 percent, compounded annually, for the last 15 years. What is the value of your account today?
4. Suppose you are committed to owning a $221,354 Ferrari. If you believe your mutual fund can achieve a 9.62 percent annual rate of return, and you want to buy the car in 13 years on the day you turn 30, how much must you invest today?
5. You’re trying to save to buy a new $152,325 Ferrari. You have $38,420 today that can be invested at your bank. The bank pays 4.15 percent annual interest on its accounts. How long (in years) will it be before you have enough to buy the car?