Problem 1. You want to begin a college fund for your newborn child; you hope to accumulate $50,000 by 17 years from now. If a current investment opportunity yields 9 percent, how much must you invest in a lump sum to realize the $50,000 when needed?
Problem 2: If you had invested $100/Mo. for the last 5 years into the Fidelity Magellan Mutual Fund, you would now have $11,092 in your mutual fund account. What rate of return have you earned on your investment of $100 per month?
Problem 3: If you purchase a diamond for $6,000 today and sell it for $7,500 in three years, what would be your annual rate of return on the investment?
Problem 4: If prices are expected to increase by 1% per year, how much do you need in your retirement account if you want $3,500 per month in today's dollars. You expect to retire in 35 years, the rate of return on your retirement account is 10%, and you want to receive money from your account for 25 years?