Chapter 11, Problem 3PB

Use the tables in Appendix B to answer the following questions.

A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account?

B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%?

C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years?

D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years.

Assuming you can earn 3% interest, which do you recommend and why?