Question #1 – Compound Interest
Jessica needs $7,500 to pay for a new boat. She invested $5,500 of her own cash into an account paying 7.5% interest compounded quarterly. How many years will be required to earn the $2,000 in interest that she needs?
Question #2 – Annuity Earnings
Paul is saving money in an annuity and is earning 5% annual interest compounded annually. If he deposits $2,500 in the account each year for 10 years, what will the future value of his account equal? How much interest will he have earned?
Question #3 – Mortgage Finances
Dee and Todd purchased a summer getaway in northern Wisconsin. Dee’s father agreed to finance the purchase with a 2% annual rate, 30-year mortgage. This resulted in a mortgage payment of $772.50/month. Calculate the amount of money the couple borrowed and the amount of interest they will pay over the life of the loan.
Requirements:
- Show all your work so that it can be clearly seen how you solved the problem.
- Make sure your final answer is clear and visible
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