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Savings Plans

Future value and interest accumulated by regular deposits, the deposit needed to reach a goal, and how a lump sum compares with monthly contributions.

Math in Society, Savings Plans

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8 exercises

Exercise 7

Suppose you have 30 months in which to save $3,500 for a cruise for your family. If you can earn an APR of 3.8%, compounded monthly, how much should you deposit each month?

2.5

Exercise 8

You wish to have $3,000 in 2 years to buy a fancy new stereo system. How much should you deposit each quarter into an account paying 6.5% APR compounded quarterly?

2.5

Exercise 9

Jamie has determined they need to have $450,000 for retirement in 30 years. Their account earns 6% APR. How much would Jamie need to deposit in the account each month?

2.5

Exercise 10

Lashonda already knows that she wants $500,000 when she retires. If she sets up a saving plan for 40 years in an account paying 10% APR, compounded quarterly, how much should she deposit each quarter?

2.5

Exercise 15

Vanessa just turned 40 years old. Her plan is to save $100 per month until retirement at age 65. Suppose she deposits that $100 each month into a savings account that earns 4% APR compounded monthly.

  1. What will her balance be when she turns 65 years old?

  2. If she started saving when she turned 25 years old instead, what would her balance be?

2.5

Exercise 16

Chris wants to start saving money for retirement. Suppose he deposits $1000 every year into a savings account that pays 5% APR compounded annually.

  1. How much will Chris have saved in 20 years?

  2. How much will Chris have saved in 40 years?

2.5

Exercise 17

Fareshta and Ahmad want to save to help send their child to college. Their plan is to put aside $50 every week. Suppose they deposit that money into an account that pays 3.5% APR compounded weekly.

  1. How much money will be in the account in 18 years? (assume 52 weeks in a year)

  2. What minimum initial lump sum deposit would they need to make today to have the same balance in 18 years if they weren't putt…

2.5

Exercise 18

Elisa decides to cancel her cable TV and to deposit the $100 she will save each month into an account that pays 4.5% APR compounded monthly.

  1. How much will she have in the account in 10 years?

  2. What minimum initial lump sum deposit would she need to make today to have the same balance in 10 years without saving the $100 per month?

2.5

Adapted from Math in Society © 2018–2024 Portland Community College Math Instructors. Licensed under CC BY-SA 4.0. Source: Math in Society. Imported at revision 68ee43c.