The following situations should be considered independently.
1. You want to accumulate $60,000 for a down payment on a small business. You will invest $30,000 today in a bank account paying 8% interest compounded annually. Approximately how long will it take you to reach this goal?
2. The Jasmine Tea Company purchased merchandise from a supplier for $28,700. Payment was a noninterest bearing note requiring Jasmine to make five annual payments of $7,000 beginning one year from the date of purchase. What is the interest rate implicit in this agreement?
3. You borrowed $10,000 from a friend and promised to pay the loan in 10 equal annual installments beginning one year from the date of the loan. Your friend would like to be reimbursed for the time value of money at a 9% annual rate. What is the annual payment you must make to pay back your friend?