MK 3010 – A couple invests $11,691.00 today in a money market fund
1. A couple invests $11,691.00 today in a money market fund that pays 6.00% per year. What is the value of this account in exactly one year?2. A couple needs $9,468.00 in one year. They only have $6,799.00 today to invest in a mutual fund. What return must the fund generate this year in order to reach their goal?3. A devoted Indiana basketball fan needs $10,700.00 to attend the Final Four exactly one year from today. If the fan can earn 6.00% annually on his investments, how much should he set aside today?4.Suppose that your favorite college team surprisingly makes the SEC Championship game in Atlanta. You want to go but you do not have the $9,191.00 needed today to take your family. A friend offers to loan you the moneytoday, but would like his loan returned with 9.00% interest exactly one year from today. How much will you pay your friend in next year?5.An investor puts $500.00 in a money market fund today that will earn 4.00% over the next year. What is the future value of this account in exactly one year?6.A young graduate looks to save money to buy a house 5.00 years from today. He is somewhat conservative and will invest his money in a bond fund that pays 3.00% annually. The graduate invests $10,299.00 today. How much will his account be worth in 5.00 years?7.A carpenter sets aside $246,000.00 today to renovate a house in a historic neighborhood. If the housing market is good, he expects to sell the house for $401,950.00 in 3.00 years. However, if the housing market is bad, he will only be able to sell the house for 289,200.00.8.An engaged couple agrees to get married once their savings equal $54,300.00. They have $38,700.00 at the moment and will invest the money in an account that earns 8.00% per year. How many years will the engagement last?9.After being drafted in the first round of the MLB draft, a star pitcher invests his signing bonus of $4,876,000.00 in a mutual fund. The fund pays on average 8.00% APR. The player will not touch this money until he retires from the league in 20.00 years. How much will this “nest egg” be worth at retirement?10.A married couple will buy a beach house once their savings equal $1,975,500.00. They have $1,087,100.00 at the moment and will invest the money in an account that earns 12.00% per year. How many years before they purchase the beach house?
