Simple & Compound Interest Questions and Answers

A bond has a $1,000 par value, a 5.5% interest rate, and 15 years to maturity. How much total interest will be paid on the bond until it matures?

Suppose you make an investment of $5,000 in an account earning 10.5% interest compounded quarterly. How many years will it take for your investment to grow to $50,000? SHOW YOUR WORK IN STEPS. (Round your answer to the nearest tenth of a year.)

A financial advisor recommends that you add some municipal bonds to your portfolio because of their tax advantages. You currently have corporate bonds with a yield of 8.20%. How much do the municipal bonds need to yield for you to consider them equivalent to the corporates (assuming similar risks/ratings for each) if you have a marginal tax rate of 25.00%. (a)10.93% (b)9.07% (c)5.60% (d)7.07% (e)6.15%

You put $200 into an account that pays simple interest. Once a year the bank will pay you 5% interest on your money. How much interest will you earn in one year? (a) $20 (b) $10 (c)$1

Vehicle Loan Amount $36,000 Term 6 year Interest Rate 21% Monthly Payment ? Total interest over 6 years $7560.00 What is the monthly payment on the loan information given above? a)$500.00 b)605.00 c)$105.00

Hank invested $700 in a CD that had a 7.5% APR and was compounded quarterly. If Hank had the CD for 12 years, what would the total worth of the CD be at the end of 12 years? (A) $1707.43 (B) $1207.43 (C) $1007.43

The population and the growth rate as of 2014 for a country are shown below. Assume that the growth rate remains the same from year to year. Determine the size of the population in 2023. Population in 2014 = 185 million; growth rate = 1.387% million.(Round to the nearest integer as needed.)

Anna signed a rental agreement on a new apartment. As part of the agreement, Anna agreed to pay a 4% increase in monthly rent each year she rents the apartment. If her initial rent is $750 per month, how much will Anna pay per month after renting the apartment for seven years? (a) $877 (b)$780 (c)$986.95

A person has $1,587 in your bank account that is paying an interest rate of 1.6% (0.016) per year. How much money will the person have in the account in 7 years?(Note: r= 1.016) (Round to the nearest cent as needed.)

Juan invests $6,000 at 13% simple interest for 1 year. How much is in the account at the end of the 1 year period? Answer: $ ___________

A payday loan company charges a $50 fee for a $600 payday loan that will be repaid in 11 days. Treating the fee as interest paid, what is the equivalent annual interest rate? [?] % interest

Margo borrows $1100, agreeing to pay it back with 5% annual interest after 8 months. How much interest will she pay? Round your answer to the nearest cent, if necessary. $ ____________

If you want to earn 5% annual simple interest on an investment, how much should you pay for a note that will be worth $14,200.00 in 11 months. You should pay $_________

Hunter is looking to buy a house for $200,000 with a $10,000 down payment. If Hunter has a 15-year mortgage at a 7% interest rate, approximately how much will Hunter pay per month for the mortgage? A. $1,316.55 B. $2,201.54 C. $1,733.74 D. $1,568.75.

What interest rate would be needed for a $9600 investment that is compounded semi-annually for 9 years if it needed to have a future value of $13000? (answer in percent form to 2 decimal places)

After starting her new career on New Years Eve at age 20, Tessa decides to start saving up her money. Every 2 weeks she takes $30 from her paycheck and puts it in a tax free savings account (TFSA). The interest rate is 1.6% per year compounded annually. a. How much will her TFSA be worth on New Year's when she is 30 years old?

At the end of every 3 months, for 5 years, Alec deposits the same amount of money into a savings account that earned 1.84% interest, compounded monthly. He ended up with $7500. How much was each deposit?

Matthew is going to invest in an account paying an interest rate of 5.5% compounded monthly. How much would Matthew need to invest, to the nearest ten dollars, for the value of the account to reach $221,000 in 17 years?

After making payments of $907.10 for 8 years on your 30-year loan at 8.7%, you decide to sell your home. What is the loan payoff? (Round your answer to two decimal places.) $ ______

Tammy wants to renovate her upstairs bathroom. She is budgeting $16000 for all the changes she would like to make. She has found an investment opportunity that compounds monthly at a rate of 4.9%. (Use the compound interest formula to find this value, show your work) a) How much money should she invest if she wants to be able to do this in 8 years? b) How much money should she invest if she's only willing to wait 5 years?

If 38,000 dollars is invested at an interest rate of 6 percent per year, find the value of the investment at the end of 5 years for the following compounding methods. (a) Annual: Your answer is (b) Semiannual: Your answer is (c) Monthly: Your answer is (d) Daily: Your answer is (e) Continuously: Your answer is

Camille is getting married and is hoping to buy her dream wedding dress for $5500. She has managed to save $4700 to go towards it. If she invests this in an account that compounds bi-monthly at a rate of 5.3%. How long will she have to wait until she can buy the dress?

Debts of $900 due 2 months ago and $6000 due today are to be paid by payments of $500 in two months and a final payment in five months. If 9% interest is allowed and the focal date is 5 months from now, what is the size of the final payment?

1. Predict which investment will require a greater percent value to be invested. Explain your prediction and then verify it. A. Future value of $10 000 at 5%, compounded monthly, for 10 years B. Future value of $10 000 at 5%, compounded quarterly, for 10 years

What lump sum should be deposited in an account that will earn 8% compounded quarterly, to grow to $79,562.77 in 29 years? If needed, round to 2 decimal places The lump sum is $ ______

Your credit card has a balance of $4500 and an annual interest rate of 19%. You decide to pay off the balance over three years. If there are no further purchases charged to the card, you must pay $164.98 each month, and you will pay a total in$1439 28. Assume you decide to pay off the balance over one year rather than three. How much more must you pay each month and how much less will you pay in total interest?

Today, a $10,000 bond bearing interest at 3% payable semi-annually will be due in 9 years and 6 months. The bond is purchased today when money is worth 2% compounded semiannually. The bond is sold not at par. Determine the PV of the Face Value. Round your answer to 2 decimal places.

Suppose you invest $120 a month for 7 years into an account earning 10% compounded monthly. After 7 years, you leave the money, without making additional deposits, in the account for another 30 years. How much will you have in the end? $ _______________

You want to be able to withdraw $35,000 from your account each year for 15 years after you retire.You expect to retire in 30 years. If your account earns 10% interest, how much will you need to deposit each year until retirement to achieve your retirement goals? $__________

At the end of every 6 months, the Dangs deposit $200 in a savings account that pays 4.5%/ a compounded semi-annually. They made the first deposit when their son was 18 months old, and they made the last deposit on their son's 18th birthday, when he received the funds from his parents. How much did he receive?

Jared thinks it would be wise to save for his newly born son's college fund. Jared invests $7,000 into a college fund for his son. A company offers APR of 2.7%. The equation for the total amount of the investment is seen below. How much money will Jared's son have in 18 years when he starts college, assuming that the company will not change the APR over the years? A = P(1 + r)ᵗ Where, A - total amount of the investment. P - principal (initial amount invested) r - annual percentage rate (as a decimal) t - time in years a) $47,285 b) $11,307 c) $19,804 d) $16,620

Find the finance charge for an account with an average daily balance of $256.95 and a monthly interest rate of 1.5%. (a) $38.50 (b) $1.71 (c) $17,130.00 (d) $3.85

Over the course of 8 years, Serge makes deposits of $250 every 6 months into an account that pays 3.75%/a interest compounded semi-annually. How much interest will Serge have earned over the 8-year term?

If you deposit $100 at the end of each month in a bank account with an annual interest rate of 6% compounded monthly. What will the balance be after 5 years?

If you make a payment of $200 at the end of each month into an account that earns 2.4% annual interest, what will the future value of the account be at the end of 10 years? Round your answer to 2 decimal places./

1. (a) What is the largest monthly payment, to be paid at the end of each month, that we can get from perpetuity with an initial deposit of $20,000 that earns 4% p.a. compounded monthly? Give your answer rounded to the nearest cent. (b) If the first payment is deferred by 12 months, the what is the largest monthly payment from this perpetuity? Give your answer rounded to the nearest cent. (c) What per annum nominal interest rate with interest compounded monthly would be needed to achieve payments of $100 at the end of every month if the initial investment is $20,000?

Find the missing value. Round your answer to the nearest year. Principal Rate Time Simple Interest $200,000 2.5% __ years $100,000

A young couple wants to have a college fund that will pay $25,000 at the end of each half-year for 8 years. (a) If they can invest at 6%, compounded semiannually, how much do they need to invest at the end of each 6-month period for the next 18 years to begin making their college withdrawals 6 months after their last investment? (Round your answer to the nearest cent.) (b) Suppose 8 years after beginning the annuity payments, they receive an inheritance of $38,000 that they contribute to the account, and they continue to make their regular payments as found in part (a). How many college withdrawals will they be able to make before the account balance is $0? (Round your answer to the nearest whole number.)

Lillian is going to invest in an account paying an interest rate of 5.7% compounded continuously. How much would Lillian need to invest, to the nearest ten dollars, for the value of the account to reach $7,600 in 7 years?

Maya invested $5,000 in an account paying an interest rate of 3.9% compounded continuously. Assuming no deposits or withdrawals are made, how long would it take, to the nearest tenth of a year, for the value of the account to reach $6,880?

Your friend deposits $7500 in an investment account that earns 8.1% annual interest. Find the balance after 6 years when the interest is compounded monthly. a) $12,193.50 b) $12,134.44 c) $11,967.83 d) $12,173.61

Use the model A = Pe ʳᵗ or A= P(1+r/n)ⁿᵗ where A is the future value of P dollars invested at interest rate compounded continuously or n times per year for 7 years. If a couple has $200,000 in a retirement account, how long will it take the money to grow to $1,000,000 if it grows by 5.5% compounded continuously? Round up to the nearest year. It will take approximately years..

Consider a six year bond with semiannual coupons of $60 each. The bond is redeemed at $500. Compute the price if the bond is purchased at a nominal yield rate of 8% compounded semiannually. Round your answer to the nearest .

Interest is compounded semianually. Find the amount in the account after the given time. Principal Rate of Interest Time $3000 6% 3 years The amount in the account is $ (Round to the nearest cent.)

How many years will it take $1,000 to grow to $1,500 if it is invested at 5.75% compounded continuously?

Investments that earn compound interest are more desirable, in general because: a) Compound interest rates are usually higher b) Banks will let you leave the money in longer to earn more interest c) Compound interest investments can be made with a smaller amount of money to invest d) Compound interest pays interest on interest already earned in the previous interest period

A person invests 3500 dollars in a bank. The bank pays 6.75% interest compounded quarterly. To the nearest tenth of a year, how long must the person leave the money in the bank until it reaches 8500 dollars? A = P(1 + r/n)ⁿᵗ

A lottery has two options for winners collecting their prize: Option A: $20 000 quarterly payments for life Option B: $1 700 000 in one lump sum The current interest rate is 3.48%/a compounded quarterly. Which option would you recommend to Sharon who is the sole winner of the lottery and expects to live another 40 years? Show all your work for full marks!

How much money must be deposited today to become $2150 in 20 years at 45% compounded continuously? The deposit must be $ (Round to the nearest cent as needed.)

On the first day of the fiscal year, a company issues a $1,000,000, 8%, 6-year bond that pays semiannual interest of $40,000 ($1,000,000 x 8% × 1/2), receiving cash of $954,407. Journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense Discount on Bonds Payable Cash Feedback Check My Work Bonds Payable is alway recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond.