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1. Rachel, who just turned 18, deposits a $15,000 gift into aninterest-bearing account earning a 7.5% annual rate of interest.How much will she have in the account when she retires at age 60,assuming all interest is reinvested at the 7.5% rate? If Racheldecided she only needed $300,000 at retirement, could she retire at59? Explain.
2. James deposited $800 at the end of the past 16 years topurchase his granddaughter, Kali, a car, James earned 8% interestcompounded annually on his investment. If the car Kali choosescosts $22,999, would she have enough money in the account topurchase the vehicle? What would be the deficit or surplus?
