Exam 21: Savings Models

A computer was purchased in 1996 for $2500. Its value in current dollars depreciates steadily at a rate of 30% per year. What will the computer's value be at the beginning of 2003?

If the current inflation rate of 3% remains constant over the next 10 years, what will the relative purchasing power of a dollar be in 10 years?

You have $7000 that you invest at 9% simple interest. What is the balance after 14 years?

Michael wants to make an investment that will have a real growth rate of 10%. If the current inflation rate is 11.4%, what annual interest rate will he need to get on his investment to accomplish his goal?

What is the APY for 6.25% compounded daily?

Karen made an investment with a 12% annual yield. However, the real growth rate of her investment was only 7.5%. What was the inflation rate?

In early 2002, the inflation rate was about 1.4%. If you invested in a savings account with an annual interest rate of 6.5%, what was the real growth rate of this investment?

Juanita has $100 deducted from her paycheck at the end of each month and put into a savings account earning 11% interest compounded monthly. She continues these deposits for five years. How much is the account worth at the end of the five years?

Which of the following measures the rise in prices from a set base year?

Brad wants to make an investment that will have a real growth rate of 12%. If the current inflation rate is 2.38%, what annual interest rate will he need to get on his investment to accomplish his goal?

A man cuts back on his latte habit and instead makes $20 deposits each month into a savings account earning 6% interest compounded monthly. He continues these deposits for eight years. How much will the account be worth after eight years?

What is the APY for 6% compounded continuously?

Kamel bought a house in 1982 for $67,000 and sold it in 2014. If the 1982 CPI is 96.5 and the 2014 CPI is 236.7, how much would the house be worth in 2014 dollars?

Katrina invested in her employer's stock program in 1992. The annual yield for her investment was 9.3%, and the inflation rate was 1.47%. What was the real growth rate of this investment?

Alex wants to make an investment that will have a real growth rate of 6.2%. If the current inflation rate is 4.5%, what annual interest rate will he need to get on his investment to accomplish his goal?

Suppose that you have $4000 on deposit at your bank at an annual rate of 1.5%. If the bank compounds continuously, how much interest do you receive after three years?

A man makes $10 deposits each quarter into a savings account earning 8% interest compounded quarterly. He continues these deposits for 12 years. How much will the account be worth after 12 years?

A car was purchased in 1985 for $15,000. Its value in current dollars depreciates steadily at a rate of 13% per year. What will the car's value be at the beginning of 2003?

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. -John bought a house in 1947 and sold it in 2012 for $80,000. If the 1947 CPI is 22.3 and the 1997 CPI is 160.5, how much would the house be worth in 1947 dollars?

Suppose you invest $5000 and would like your investment to grow to $10,000 in eight years. What interest rate, compounded weekly, would you have to earn in order for this to happen?