Practice Problems
Practice Problems
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Problem 1: Solving for present value
Problem 1: Solving for present value
Suppose you want to buy a new car in five years. The cost of the car will be $18,000. The annual interest rate is 4%. How much do you need to put into your savings account today so you will have enough to purchase the car in five years?
Problem 2: Solving for Interest
Problem 2: Solving for Interest
You put $205.34 in a bank today. What is the annual interest rate that is earned if you expect to have $800 in 12 years?
Problem 3: Solving for Time
Problem 3: Solving for Time
Suppose you want to buy a car that costs $36,000. You deposit $16,674.97 into a savings account earning 8% interest. How long until you can afford the car?
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