i) You want to have $500,000 saved up in thirty years. Suppose that you can get the interest rate of prime + 5% on your investment (compounded quarterly.)
How much require to invest today to have $500,000 30 years in future?
How much of total is interest?
ii) You borrow $50,000 at 5% interest (compounded daily).
After one year passes, you pay off $25000 of loan. How much still owe on loan?
After another year passes, you want to pay off loan. How much need to pay to pay it off?