Chapter R.1, Problem 42E

Interest Ron Hampton needs to choose between two investments: One pays 6% compounded annually, and the other pays 5.9% compounded monthly. If he plans to invest 18,000 for 2 years, which investment should he choose? How much extra interest will he earn by making the better choice?

What interest rate would you need to get to double an investment of 200 in eight years?

To get the best loan rates available, the Riches want to save enough money to place 20% down on a $160,000 home. They plan to make monthly deposits of $125 in an investment account that offers 8.5% annual interest compounded semiannually. Will the Riches have enough for a 20% down payment after five years of saving? How much money will they have saved?