1. Twins Kimberly and Kaitlyn are bath age 27. Beginning at age 27, Kimberly invests $2000 per year for ten years and then never sets aside another penny. Kaitlyn waits ten years and then invests $2000 per year for the next 30 years. Assuming they both earn 7 percent, how much will each twin have at age 67?
2. Isabel Lopez, age 18, recently received an inheritance of $50,000 from her grandmother’s estate. She plans to use the money for the down payment on a home in ten years when she finishes her education. Right now the funds are in a savings account paying 1.0 percent APY. How much would Isabel have in ten years if instead she purchased a ten-year CD paying 3.0 percent?
3. Andrew Parker has a checking account at the credit union affiliated with his university.
Illustrated below are his check register and monthly statement for the account. Reconcile the checking account and answer the following questions.
(a) What is the total of the outstanding checks?
(b) What is the total of the outstanding deposits?
(c) Why is there a difference between the uncorrected balance in the check register and the balance on the statement?
(d) What is the updated and correct balance in the check register to the right?

4. You want to create a college fund for a child who is now 3 years old. The fund should grow to $30,000 in 15 years. If an investment available to you will yield 6 percent per year, how much must you invest in a lump sum now to realize the $30,000 when needed?

5. You plan to retire in 40 years. To provide for your retirement, you initiate a savings program of $4000 per year yielding 7 percent. What will be the value of the retirement fund after 40 years?

  • CreatedNovember 26, 2014
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