AGRICULTURAL ECONOMICS 640
Time Value of Money
(1) You want to accumulate $20,000 by the end of 18 years as a college education fund for your son. You plan to make a deposit at the end of each year in an account that yields 6% interest compound annually. How much will you need to deposit each year?
(2) What is the value at the end of year 20 of $10,000 deposited today which yields 9% compound annually?
(3) You invest $1,000 at 2% compound annually. How many years would it take to accumulate $2,208?
(4) You want to loan your son-in-law $6,000 for the purchase of a new car to be repaid monthly over 50 months. If the annual percentage rate is to be 6%, what will his monthly payments run?
(5) A rich uncle would like to help his nephew get started farming 10 years from now. Assume the uncle deposits $1,500 per year at the end of each of the next 10 years into an account that yields 7% interest compounded annually. How much would be in the account at the end of the 10th year?
JUST FOR FUN
Solve each of the following problems by setting up and solving an ALGEBRAIC EQUATION.
(6) James bought a polo shirt at a 12.5% discount sale for $58.00. What was the original store price of the shirt?
(7) Charlotte wants to make a 27% profit for each book that she writes. If the costs to write the book are $75.00, at what price should it be sold?
(8) If $750 is invested at 15.83%, how much additional money must be invested at 4.5% so that the total return for both investments averages 7%?
The Case of Donna Rowe
Donna Rowe graduated from Plymouth High School 8 years ago with a background in vocational agriculture. Donna has worked for the Ford Motor Company as a truck driver until a year ago, when she decided to start her own business. Her father was an established poultry farmer, and through him she had learned that the Kroger Company was looking for someone to haul eggs to their egg processing plant. Donna had saved $6000, but the refrigerated truck…