# Compound Interest, Unit III Assessment help

1. You have just introduced “must have” headphones
for the iPod. Sales of the product are expected to be 20,000 units this year
and are expected to increase by 16% annually in the future. What are the
expected sales in each of the next three years? If the 20,000 units were
expected to increase by 18% a year, what are the expected sales next year for
this product?

2. What is the future value of \$500 a year for 9 years
compounded annually at 10%? What is the future value of \$900 for nine years
compounded annually at 10%?

3. To pay for your education, you have taken out \$28,000 in
student loans. If you make monthly payments over 13 years at 5% compounded
monthly, how much are your monthly student loan payments?

4. Alex Karez has taken out a loan of \$180,000 with an annual
rate of 10% compounded monthly to pay off hospital bills from his wife’s
illness. If the most Alex can afford to pay is \$3,500 a month, how long will it
take to pay off the loan? How long will it take to pay off the loan if he can
pay \$4,000 each month? Use five decimal places for the monthly percentage rate
in your calculations. If Alex can pay \$3,500 a month, how many years will it
take to pay off the loan?

5. How much do you have to deposit today so that, beginning 11
years from now, you can withdraw \$9,000 a year for the next 8 years (periods 11
through 18) plus an additional amount of \$18,000 in the last year (period 18)?
Assume an interest rate of 6%.