Question

6) Dawn Swift discovered that 20 years ago, the average tuition for one year at an Ivy League school was $4,500. Today, the average cost is $29,000. What is the growth rate in tuition cost over this 20-year period?

7) A Max, Inc. deposited $2,000 in a bank account that pays 12% interest annually. What will the dollar amount be in four years, assuming that interest is paid annually?

8) You bought a painting 10 years ago as an investment. You originally paid $85,000 for it. If you sold it for $484,050, what was your annual return on investment?

9) Middletown, USA currently has a population of 1.5 million people. It has been one of the fastest growing cities in the nation, growing by an average of 4% per year for the last five years. If this city's population continues to grow at 4% per year, what will the population be 10 years from now?

10) How many years will it take for an initial investment of $200 to grow to $544 if it is invested today at 8% compounded annually?

Answer 1

6.) growth rate = (present / past)^1/n - 1

  growth rate = (29000/4500)^(1/20)-1

= 9.764%

7.) we will use compound interest which is P (1 + r/n)^(nt), where P is the initial principal balance, r is the interest rate, n is the number of times interest is compounded per time period and t is the number of time periods

= 2000(1+12/1)^(1*4)

= $ 3147.04

8.) Initial Investment = $ 85000

Sale Price = $ 484,050

Years = 10

Annual return = ((sale price/initial investment)^(1/10)-1) * 100

= 19%

9.) Population = 1.5 million

Growth rate = 4%

Years = 10

Population after 10 years = 1.5(1+4/1)^(1*10)

= 2.22 million

10.) Initial investment = $ 200

Interest rate = 8%

expected amount = $ 544

YEARS WILL IT TAKE = 13 YEARS