Problem
Use the tables below and Exhibit 1-A, Exhibit 1-B, Exhibit 1-C, Exhibit 1-D to calculate the balances of the information provided below. Assume that the time period for each scenario is 5 years, and the interest rate is 3%.
I. Jamie Lee needs to save a total of $9,000 in order to get started in her cupcake café venture. She is presently depositing $1,800 a year in a regular savings account. Calculate the future value of these deposits.
II. Assuming that she leaves her emergency fund of $1,800 untouched, how much will her emergency fund be worth?
III. What if Jamie Lee had a relative that could give her money now that she could invest? What is the minimum amount she would need now to ensure that she had $9,000 when she wanted to open the cupcake café?
IV. As Jamie Lee is planning ahead for operating the cupcake café, she calculates that she will need $30,000 per year in salary. What is the value of five years of salary when the cupcake café opens? (Assume that she will take the salary as a one-time payment each year.)