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Question

1. Assume that the average starting salary of a business major is $45,000 today. If inflation has been constant at 3% per year for the past 20 years, what would an equivalent salary have been in 1997 (20 years ago)? Assume annual compounding.

2. How much interest will you pay over the life of your car loan if you borrow $8,000 over a 36 month period at an interest rate of 8%?

3. If you invest $500 today, how much will you have in 12 years assuming an interest rate of 8% and annual compounding?