Determining Unknown Quantities
Determine the unknown quantity for each of the following independent situations using the appropriate interest tables:
1. Jeff and Nancy want to start a trust fund for their newborn son, Mark. They have decided to invest $5,000 today. If interest is 8% compounded semiannually, how much will be in the fund when Mark turns 20?
2. Nixon Corporation wants to establish a retirement fund. Management wants to have $1,000,000 in the fund at the end of 40 years. If fund assets will earn 12%,compounded annually, how much will need to be invested now?
3. How many payments would Star, Inc., need to make if it purchases a new building for $100,000 with annual payments made at the end of each year of $16,401.24 and interest of 16%, compounded annually?
4. An investment broker indicates that an investment of $10,000 in a CD for 10 years at the current interest rate will accumulate to $21,589. What is the current annual rate of interest if interest is compounded annually?