a. If you invested 10,000 in a CD (Certificate of Deposit) paying you five percent per year, what would be the value of your CD at the end of five years?
b. If you won $250,000 today and invested all of it in a security that paid a eight percent rate of return, how much would you have in 20 years?
c. If you bought a new home today valued at $300,000, what will be its value in 10 years if inflation is three percent per year?
d. If you can earn eight percent per year on your retirement account, how much will you have to save each year if you want to retire in 20 years with $1 million?
The solution discusses and helps in computing the future value of an annuity over time.