1) You are planning for your retirement and have decided the following: you will retire in 35 years and will make monthly deposits into your retirement account of $400 for the next 15years and then monthly deposits of $800 for the remaining 20 years until retirement. You have

access to an account that earns a 7% rate of return.

a)How much will you have when you retire?

b)Once you retire, you plan to live off of the interest. If you make annual withdrawals, what will be your retirement income.

c)If your goal is to be able to live off of $80,000 per year during retirement (instead of your answer to b), how much more would you have to have at retirement to reach this goal?

2) You have $20,000 in student loans with an interest rate of 5%, compounded annually. You plan to pay the loans off with equal annual payments over the next ten years.

a. What will your annual payment have to be?

b. Prepare the first three rows of the amortization schedule for paying off this loan.

3) How long would it take you to increase your savings by a factor of 10 if you can earn 12% annually?

4) You are currently comparing two investments, both of which have up-front costs of $45,000. Investment 1 pays $75,000 in 7 years. Investment 2 pays $105,000 in 9 years. Which of these investments has a higher return?

5) A six-year annuity of $8500 quarterly payments will begin 9 years from now. The discount rate is 9%, compounded quarterly.