Calculation Practice: Answer all questions below. Make sure to show your work. Answers must be typed.

3. Assume that 1 year from now you plan to deposit $1,000 in a savings account that pays a nominal rate of 8%.

a. If the bank compounds interest annually, how much will you have in your account 4 years from now?

b. What would your balance be 4 years from now if the bank used quarterly compounding rather than annual compounding?

c. Suppose you deposited the $1,000 in 4 payments of $250 each at the end of Years 1, 2, 3, and 4. How much would you have in your account at the end of Year 4, based on 8% annual compounding?

4. Your parents will retire in 18 years. They currently have $250,000, and they think they will need $1 million at retirement. What annual interest rate must they earn to reach their goal, assuming they dont save any additional funds?

5. If you deposit money today in an account that pays 6.5% annual interest, approximately how long will it take to double your money?

6. If you deposit money today in an account and it will take 8.5 years to double your money, what interest rate must you earn?