1. After placing $8,000 in a savings account paying annual compound interest of 8%, calculate the amount that will accumulate if it is left for 8 years?
2. You have just introduced “must have” headphones for the iPod. Sales of the product are expected to be 20,000 units this year and are expected to increase by 16% annually in the future. What are the expected sales in each of the next three years? If the 20,000 units were expected to increase by 18% a year, what are the expected sales next year for this product?
3. To pay for your education, you have taken out $28,000 in student loans. If you make monthly payments over 13 years at 5% compounded monthly, how much are your monthly student loan payments?
4. To buy a new house, you must borrow $150,000. To do this, you take out a $150,000, 20-year, 10% mortgage. Your mortgage payments, which are made at the end of each year (one payment each year), include both principle and 10% interest on the declining balance. What amount will your annual payment be?
5. How much do you have to deposit today so that, beginning 11 years from now, you can withdraw $9,000 a year for the next 8 years (periods 11 through 18) plus an additional amount of $18,000 in the last year (period 18)? Assume an interest rate of 6%.