Homework Answers
Answer to Question 1:
Amount deposited today = $1,400
Amount deposited in 1 year = $550
Interest rate = 2.60%
Value of account in 2 years = $1,400 * 1.0260^2 + $550 *
1.0260
Value of account in 2 years = $2,038.05
In two years, the amount that you will have is $2,038.05
Answer to Question 2:
Desired sum in 7 years = $95,000
Interest rate = 3.70%
Amount invested = $95,000 / 1.0370^7
Amount invested = $73,666.89
The amount they need to put away today is $73,666.89
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