1. TIME FOR A LUMP SUM TO DOUBLE If you deposit money today in an account that pays 4% annual interest, how long will it take to double your money?

2. FUTURE VALUE FOR VARIOUS COMPOUNDING PERIODS Find the amount to which $500 will grow under each of these conditions:

a. 12% compounded annually for 5 years

b. 12% compounded semiannually for 5 years

c. 12% compounded quarterly for 5 years

d. 12% compounded monthly for 5 years

e. 12% compounded daily for 5 years

f. Why does the observed pattern of FVs occur?

3. PV AND LOAN ELIGIBILITY You have saved $4,000 for a down payment on a new car. The largest monthly payment you can afford is $350. The loan will have a 12% APR based on end-of-month payments. What is the most expensive car you can afford if you finance it for 48 months? For 60 months?

4. REQUIRED LUMP SUM PAYMENT Starting next year, you will need $5,000 annually for 4 years to complete your education. (One year from today you will withdraw the first $5,000.) Your uncle deposits an amount today in a bank paying 6% annual interest, which will provide the needed $5,000 payments.

a. How large must the deposit be?

b. How much will be in the account immediately after you make the first withdrawal?

5. PAYING OFF CREDIT CARDS Simon recently received a credit card with an 18% nominal interest rate. With the card, he purchased an Apple iPhone 7 for $372.71. The minimum payment on the card is only $10 per month.

a. If Simon makes the minimum monthly payment and makes no other charges, how many months will it be before he pays off the card? Round to the nearest month.

b. If Simon makes monthly payments of $35, how many months will it be before he pays off the debt? Round to the nearest month.

c. How much more in total payments will Simon make under the $10-a-month plan than under the $35-a-month plan? Make sure you use three decimal places for N.