1. John works part-time and earns $100 each week. He deposits his earnings at the end of each month in an account which pays 6.8% compounded monthly. If he does this consistently for three years, will he have enough to buy the $15,000 car he's hoping to get? (Assume 4 weeks in a month.)
2. If you have $800 to invest for two years, which is the better investment: 7.5% compounded annually or 7.3% compounded monthly?
3. Ed is 38 years old and settled into a job making about $27,000 per year that he receives in equal payments at the end of each month. He decides it's time to begin putting 10% of each paycheck immediately into a retirement account which pays 6.7% compounded monthly. Alice, Ed's sister, is 22 years old. She decides to go ahead and start putting $75 at the end of each month into the same retirement account, even though she isn't making much money at her job yet. If both continue doing the same until they retire at age 65, who will have more retirement money? Who will have deposited more?
4. David deposits $500 at the end of each quarter into an account paying 6.5% interest compounded quarterly for 7 years. He then changes his deposit to $725 each quarter for 5 more years at the same rate. What will the amount on deposit be after the entire 12 years?
5. Christa is buying a house costing $54,000. The lowest interest rate is 8.25%. Find her monthly payments if she gets a thirty year loan. What are her payments if she gets a fifteen year loan? How much money will she save with the fifteen year loan?
6. Ashleigh decided to buy that beautiful 10 acres just off the Blue Ridge Parkway. She can purchase the land for $42,000, and the owner has agreed to allow her to make payments each quarter for the next 5 years at 10% interest on the unpaid balance. Prepare the first four payments of an amortization schedule for the loan.