1. A gallon of milk costs $3.59 today. How much will it cost you to buy a gallon of milk for your grandchildren in 35 years if inflation averages 5% per year and milk prices increase along with the overall rate of inflation?
2. You borrow $95,000 and agree to pay the interest and principal in monthly installments over the next 12 years. The annual interest rate of 12%. What are the monthly payments required to amortize this loan?
3. Compound interest can best be described as:
a. interest earned on the original principal
b. the discount rate
c. interest earned on interest only
d. interest earned on interest and interest earned on the original principal