Exam 21: Savings Models

You have $4300 that you invest at 5% simple interest. How long will it take for your balance to reach $7525?

Owen sold a house in 2014 for $104,000 that he had purchased in 1990. If the 1990 CPI is 130.7 and the 2014 CPI is 236.7, how much would the house be worth in 1990 dollars?

In 1960 the inflation rate was about 5.1%. If you invested in a savings account with an annual interest rate of 7.3%, what was the real growth rate of this investment?

Monte wants to make an investment that will have a real growth rate of 6%. If the current inflation rate is 2.5%, what annual interest rate will he need to get on his investment to accomplish his goal?

What is the APY for 9.6% compounded daily?

Use the geometric series formula to find the sum of $1 - \frac { 1 } { r } + \frac { 1 } { r ^ { 2 } } - \frac { 1 } { r ^ { 3 } } + \frac { 1 } { r ^ { 4 } } + \cdots \pm \frac { 1 } { r ^ { n - 1 } }$ ,where the $\pm$ denotes + if n is odd and – if n is even (to fit the pattern of the earlier terms).

Joe wants to make an investment that will have a real growth rate of 7%. If the current inflation rate is 1.4%, what annual interest rate will he need to get on his investment to accomplish his goal?

Buck bought a house in 1967 for $19,000 and sold it in 2001. If the 1967 CPI is 33.4 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

You would like to invest an amount in a savings account paying 4% compounded daily. Your goal is to have $10,000 in 10 years. How much should you invest?

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct. -In 1997, Alva had the opportunity to either invest $100,000 for five years in the housing market or in a CD paying 2.2%. If the 1997 CPI is 160.5 and the 2002 CPI is 179.9, which is the better investment?

Charles wants to make an investment that will have a real growth rate of 8%. If the current inflation rate is 1.3%, what annual interest rate will he need to get on his investment to accomplish his goal?

Brad invests in a savings account that pays 8% interest compounded quarterly. What is the APY for this account?

In 2000, Patti had the choice to invest $100,000 in the housing market for five years, or invest in a CD paying 4% compounded annually. If the 2000 CPI is 172.2 and the 2005 CPI is 195.0, which is the better choice?

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct. -Chris bought a house in 1957 and sold it in 1997 for $115,000. If the 1957 CPI is 28.1 and the 1997 CPI is 160.5, how much would the house be worth in 1957 dollars?

Merrie borrowed $1000 from her parents, agreeing to pay them back when she graduated from college in five years. If she paid interest compounded quarterly at 5%, how much would she owe at the end of the five years?

A man borrowed $29,000 for two years under simple interest. At the end of the two years his balance due was $31,900. What annual simple interest rate did he pay?

Use the following information to solve the Questions: You want to invest a lump sum at 5% interest so as to have $100,000 in 20 years. -If you find an investment with annual compounding, how much should you invest?

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct. -Zeke bought a house in 1981 for $19,000 and sold it in 1997. If the 1981 CPI is 90.9 and the 1997 CPI is 160.5, how much would the house be worth in 1997 dollars?

Mildred bought a house in 1962 for $17,000 and sold it in 2014. If the 1962 CPI is 30.2 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct. -Kim sold a house in 1993 for twice the amount that he paid for it. When did he purchase the house? (Use Table 21.5.)