Answered

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Assume that the time period for each scenario is 5 years, and the interest rate is 4%.

A. Jamie Lee needs to save a total of $5,000 in order to get started in her cupcake café venture. She is presently depositing $1,250 a year in a regular savings account. Calculate the future value of these deposits.

B. Assuming that she leaves her emergency fund of $1,000 untouched, how much will her emergency fund be worth?

C. What if Jamie Lee had a relative that could give her money now that she could invest? What is the minimum amount she would need now to ensure that she had $5,000 when she wanted to open the cupcake café?

D. As Jamie Lee is planning ahead for operating the cupcake café, she calculates that she will need $27,000 per year in salary. What is the value of five years of salary when the cupcake café opens? (Assume that she will take the salary as a one-time payment each year.)

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