Simple & Compound Interest Questions and Answers

Find the amount A in an account with continuously compounded interest after t years if dA dt rA A 0 4 000 and A 4 4 509 99

The following data were taken from the financial statements of Hunter Inc for December 31 of two recent years Current Year 140 000 290 000 1 490 000 80 000 840 000 2 920 000 Previous Year Accounts payable 212 000 Current maturities of serial bonds payable 290 000 Serial bonds payable 10 1 780 000 Common stock 1 par value 100 000 Paid in capital in excess of par 850 000 Retained earnings 2 310 000 The income before income tax expense was 676 400 and 591 900 for the current and previous years respectively a Determine the ratio of liabilities to stockholders equity at the end of each year Round to one decimal place Current year Previous year b Determine the times interest earned ratio for both years Round to one decimal place Current year Previous year c The ratio of liabilities to stockholders equity has 3 from the previous year These results are the combined result of a interest expense in the current year compared to the previous year 3 and the number of times bond interest charges were earned has income before income taxes and

Martha invests 7800 in a new savings account which earns 5 1 annual interest compounded monthly What will be the value of her investment after 5 ye Round to the nearest cent

Dolores invests 7900 in a new savings account which earns 3 0 annual interest compounded continuously What will be the value of her investment after 6 years Round to the nearest cent Interest formulas

You are given 10 000 that will triple every year for the next 5 years 1 Write an equation that a represents this situation where y represents the value of the investment after 5 years 2 Your equation has three numbers starting value growth factor and the exponent You are allowed to double one of these numbers Which one do you think will result in the highest outcome Explain your reasoning 3 Let s find out which one gives the highest outcome a Double the starting value med b Double the growth factor C Double the exponent malol to 15

sinking fund for getting a lump sum It has borrowed 50 000 for the business at 8 interest The amount has to be repaid at the end of the fifth year The sinking fund may earn an interest at 6 compounded monthly What is the total amount to be invested including the interest payment

Click the icon to view the accounts and balances Determine the gross profit percentage for the year ended December 31 2024 Begin by selecting the formula labels to compute the gross profit percentage then enter the amounts and compute the gross profit percentage Round your answer to the nearest tenth of a perc XX Gross profit Net sales revenue Data table Selling Expenses Interest Revenue Net Sales Revenue Cost of Goods Sold Administrative Expenses Gross profit 12 100 1 400 125 000 98 750 10 500 X

Suppose that P dollars in principal is invested for t years at the given interest rates with continuous compounding Determine the amount that the investment is worth at the end of the given time period P 8000 t 13 yr a 3 interest b 4 interest c 6 5 Interest Part 0 3 Part 1 of 3 a At 3 interest rate the investment will be worth S Part 1 3 Part 2 of 3 b At 4 interest rate the investment will be worth S Part 2 3 at the end of 13 yr at the end of 13 yr

John s simple interest savings account had a balance of 1471 during the month of January At the end of the month he received 2 40 in interest The interest is calculated daily What rate of interest is John s account paying Round your answer to 2 decimal places For instance if it is 1 643 then the rate is rounded to 1 64

inda has 800 to invest She may invest at 5 compounded monthly for 6 years or at 5 1 compounded semi annually for 6 years Which investment should she make Write your responses Show your work for both situations and then state your answer

Tania borrows 5000 00 for 7 years at 6 5 per annum compounded semi annually How much interest is paid over the life of the loan

2 Woody Davenport owns 850 shares of Yoder Mills High and low prices for the year were 74 46 and 47 50 The dividends are 1 36 per share a What are the annual dividends b What are the annual yields for the high and low prices

Stephen is considering investing money in a certificate of deposit CD that offers an annual interest rate of 2 1 compounded monthly a Let P represent the initial amount in dollars that Stephen will invest Which expression represents the amount of money in the account after t yea b Stephen decides to invest 2 000 in the CD How much will the investment be worth in 5 years Enter your answer to the nearest cent 69 P 1 021 2t OP 1 00175 2t OP 1 0175 12t OP 1 175 12t

The following data are accumulated by Geddes Company in evaluating the purchase of 142 000 of equipment having a four year useful life Net Income Net Cash Flow Year 1 Year 2 Year 3 Year 4 Year 1 2 3 4 5 6 7 8 9 10 32 000 20 000 10 000 1 000 Present Value of 1 at Compound Interest 12 6 0 943 0 890 0 840 0 792 0 747 0 705 0 665 0 627 0 592 0 558 Amount to be invested 10 0 909 0 826 0 751 0 683 0 621 0 564 0 513 0 467 0 424 0 386 Nel present value 0 893 0 797 0 712 0 636 0 567 0 507 0 452 0 404 0 361 0 322 15 0 870 0 756 0 658 0 572 0 497 0 432 0 376 0 327 0 264 0 247 a Assuming that the desired rate of return is 6 determine the net present value for the proposal Use the table of the present value of 1 presented above If required round to the nearest dollar If required use the minus sign to indicate a negative net present value Present value of net cash flow Sfill in the blank 1 55 000 42 000 32 000 21 000 fill in the blank 2 20 0 833 0 694 0 579 0 482 0 402 0 335 0 279 0 233 0 194 0 162 sfill in the blank likely to look with favor on the proposal because the net present value indicates that the return proposal is than the minimum desired rate of return of 6 2 End of do

Emily is thinking of opening a small boutique early next year Her profits depend on how the economy does next year If the economy does very well she will earn a profit of 80 000 if the economy does so so she will earn a profit of 20 000 and if the economy does poorly she will lose 40 000 According to reliable forecasts the economy could be doing very well so so or poorly with probabilities 0 1 0 6 and 0 3 respectively What is her expected profits 20 000 60 000 32 000 46 667 8 000 2 666 67

Item Quantity Price 2009 2009 5 00 Magazines 400 Movie tickets Pizzas 50 100 6 00 10 00 Quantity Price 2010 2010 450 4 50 200 120 8 00 10 50 The data in the table above shows the consumption by families in an economy Th year 2009 is the reference base period Based on the table above between 2009 and 2010 the inflation rate in this coun was

Macmillan Learn On Orca Island people consume fish sandwiches and snow cones Use the data in the table to calculate the inflation rate from 2013 to 2014 based on the Consumer Price Index CPI Take 2013 as your base year Round your answer to two decimal places Fish sandwiches Snow cones inflation rate Price in Quantity in 2013 2013 5 00 Incorrect 2 00 34 38 600 1300 Price in 2014 6 00 2 50 Quantity in 2014 800 1375 Enter numeric value

Item Magazines Movie tickets Pizzas Quantity Price Quantity Price 2009 2009 2010 2010 400 5 00 450 4 50 50 6 00 8 00 100 10 00 10 50 The data in the table above shows the consumption by families in an economy The year 2009 is the reference base period 200 120 Based on the table above the cost of the base period market basket in the base period is

Find the future value of an ordinary annuity of 4 000 paid quarterly for 5 years if the interest rate is 7 compounded quarterly Round your answer to the nearest cent X

O Macmillan Learning The table shows the value of exports and imports for the small country of Cherubland Their chief export is tiny cupid arrows Use the table to answer the questions Goods Services Exports 101 50 63 0 Imports 400 195 13 57 Income payments Unilateral transfers What is the value of the merchandise trade balance for Cherubland What is the value of the current account balance for Cherubland

The problem describes a debt to be amortized Round your answers to the nearest cent A man buys a house for 330 000 He makes a 150 000 down payment and amortizes the rest of the purchase price with semiannual payments over the next 13 years The interest rate on the de is 10 compounded semiannually a Find the size of each payment b Find the total amount paid for the purchase c Find the total interest paid over the life of the loan

Find the future value of an annuity of 1300 paid at the end of each year for 10 years if interest is earned at a rate of 7 compounded annually Round your answer to the nearest cen

MY A couple needs 50 000 as a down payment for a home If they invest the 35 000 they have at 12 compounded quarterly how long will it take for the money to grow to 50 000 Round y answer to the nearest whole number yr

A retired woman has 100 000 to invest She has chosen one relatively safe investment fund that has an annual yield of 9 and another riskier fund that has a 13 annual yield How much should she invest in each fund if she would like to earn 10 000 per year from her investments 9 fund 13 fund

The following histogram represents the distribution of scores on a ten point quiz Itranscript Step 2 of 3 What is the frequency corresponding to a score of 4 Frequency 16 14 12 10 8 4 2 0 TI uuemoon 0 Quiz Scores 2 O

Guided Practice Suppose you deposit 1000 in a college fund that pays 7 interest compounded monthly Describe the parts of the function related to the context The college fund starts with The account increases every f x 1000 1 0 00058 2 The account increases by every year 12x

4 An initial investment of 3000 grows at an annual interest rate of 8 compounded continuously How long will it take to double the investment

5 An investment is expected to pay 8 per year compounded continuously If you want the value of the investment to be 500 000 after 25 years how much should you invest initially Round to the nearest dollar

Suppose that you borrow 10 000 for four years at 8 toward the purchase of a car Find the monthly payments and the total interest for the loan O 244 11 712 O 244 1712 286 13 728 O 698 23 504

ce mpletion This test can be saved and This test does not allow backtracking Changes to the answer after submission are prohibited Your answers are saved automatically emaining Time 39 minutes 43 seconds Question Completion Status 10 20 BL 50 6 71 8 90 100 110 120 13 14 15 16 17 18 19 20 Question 13 of 20

You deposit 6000 in an account earning 2 interest compounded continuously How much will you have in the account in 5 years

The histogram below shows the average weekday wait time for a roller coaster at Six Flags Calculate the mean of the data Show your work Frequency 76 5 3210 16 18 20 22 24 26 28 30 32 Time minutes For the toolbar press ALT F10 PC or ALT FN F10 Mac BIUS Paragraph V Arial A X 88 T V 10pt EXE CHHE EVA V A V Tx 26 Q 52 E E

the account in 15 years unt earning 4 interest compounded continuously How much will you have in

An investment earns 8 interest compounded quarterly for 15 years

Scenario An investment earns 5 interest compounded annually for 10 year

4 You invested 100 at 8 2 which is compounded annually for 7 years How much will your 100 be worth in 7 years

10 Your 6 and 2 3 year investment of 1 450 at 5 4 compounded monthly brought you a grand total of

9 You borrowed 95 for 1 year at 5 2 interest that is compounded semi annually Wha will you pay back in full

6 You invested your savings of 270 which gets 15 compounded annually for 3 years How much will you have in 3 years

7 You gave your friend a short term 2 year loan of 43 000 at 3 compounded annually What will be your total return

3 Your 2 year investment of 5 300 earns 2 9 and is compounded annually What will your total return be

the end of 5 years for the following compounding methods to the nearest cent a Annual b Semiannual c Monthly d Daily stment at

posit in an account now in order to have 4000 in the account in 5 years Assume the account earns 6 interest compounded monthly

3 The probability that a company will make a profit this year is 0 71 a Find the probability that the company will not make a profit this year b Find the odds against the company making a profit a The probability that the company will not make a profit this year is Type an integer or a decimal b The odds against the company making a profit are Type the ratio as a simplified fraction

Present Value of an Annuity of 1 Periods 9 0 917 1 759 1 2 3 2 531 A company has a minimum required rate of return of 9 It is considering investing in a project which costs 350 000 and is expected to generate net income of 137 000 and cash inflows of 140 000 at the end of each year for three years The up will be 9 000 The net present value of this project is

Costs that will differ between alternatives and influence the outcome of a decision are O 1 sunk costs 2 unavoidable costs 3 relevant costs

Explore what happens when you make a payment to your credit card at a different time You wil use the same information to do different problems one where the payment is made early in the billing cycle the other when the payment is made late in the billing cycle 2 The balance on the Smith s credit card on May 12 their billing date was 378 50 for the period ending June 11 they had the following transactions May 13 Charge Toys 129 79 June 1 Charge Clothing 135 85 June 8 Charge Housewares 37 63 June 9 Payment 50 00 a Find the average daily balance for the billing period which ends on June 11 May has 31 days b What is the finance charge calculated on June 11 The monthly periodic rate is 1 3 c What is the Smith s new credit card balance on June 122

What is the present value in dollars of 127011 received 15 years from now using a periodic interest rate of 1 1 compounded monthly Factors should be rounded to at least four decimal places for accuracy

9 113 A long lost relative died and has left you 15 000 Your parents insist that you save the money for college so you put it in an account that pays 8 interest compounded annually How many years will it take until your account is worth 25 000

According to Northwestern Mutual 56 of adults in the US don t know how much money they will need to save to retire This can be problematic when setting up your long term financial goals In this activity you will explore a financial instrument called a payout annuity that can be used to invest after retirement and maintain a steady income Suppose you want to have an after retirement annual income of 50 000 for 20 years 1 Suppose you plan to place your retirement fund into an account that does not earn interest How much money would you need in the account by the time you retire Without further investing your retirement fund will sit idle when it could be earning interest A payout annuity provides regular withdrawals while allowing your balance to earn interest The following formula is used to calculate the value of a payout annuity that compounds annually and has annual withdrawals Here P is the starting balance of the account that is the size of your retirement fund d is the regular annual withdrawal r is the annual interest rate as a decimal and N is the number of years you plan to take withdrawals 2 Suppose that you will invest your retirement fund the value you found in part 1 for 20 years at an interest rate of 7 per year Up to how much could you withdraw yearly in this case and still meet your goal In other words what is the value of d in the annuity formula in this case 3 Why is the value you found in part 2 larger than 50 000 Where is the extra money coming from 4 Suppose you want to keep your withdrawal at 50 000 per year At the same 7 interest per year what starting principal would you need if you want to run out of money in the account after 20 years 5 Discuss the reasons you might want to start your retirement with a higher principal than the one found in part 4