Simple & Compound Interest Questions and Answers

6 Since birth Hailee has had a savings account that started at 1000 and has been growing at a rate of 4 per year The amount of money in the account can be modeled by the equation y P 1 04 where y is the value of the account x is the number of years and P was the original deposit amount Is it possible for Hailee s account to grow to 14972 71 within Hailee s lifetime Hint try to figure out the bounds of the parameter no O yes None of these is correct

24 25 26 27 28 When Tom had 2 years left in college he took out a student loan for 13 525 The loan has an annual interest rate of 5 7 Tom graduated 2 years after acquiring the loan and began repaying the loan immediately upon graduation According to the terms of the loan Tom will make monthly payments for 5 years after graduation During the 2 years he was in school and not making payments the loan accrued simple interest Answer each part Do not round intermediate computations and round your answers to the nearest cent If necessary refer to the list of financial formulas a If Tom s loan is subsidized find his monthly payment Subsidized loan monthly payment S b If Tom s loan is unsubsidized find his monthly payment Unsubsidized loan monthly payment S X 3

Complete the following amortization table assuming monthly payments and an interest rate of 5 41 a compounded semi annually Payment Payment 0 1 2 3 4 2225 15 2225 15 2225 15 2225 15 Interest Portion Principal Portion Outstanding Balance 275000 00

The value of Mr McLean s car is given by the equation V 8000 0 86 where n represents the numbe f years since it was purchased a As the car ages what percent of its value is lost each year b What will the car be worth 5 years after its purchase date c How long will it take for the car to lose 5000 of its value

The total cost to produce x units of perfume is C x 5x 7 5x 4 Find the marginal average cost function OA 50x 55 55 X OB 50 OC 25 28 x 2 OD 25x 55 28

You have inherited land that was purchased for 30 000 in 1960 The value of the land increased by approximately 5 per year What is the approximate value of the land in the year 2015 Show your work using the Equation Editor tool

17 1 point The value of Sarah s stamp collection has been increasing by 4 each year If it is worth 534 now how much was worth 3 years ago a 472 45 600 68 d b 474 72 C 603 57

p q Fill in the table P T q T p q

Assume that a demand equation is given by x 6000 100p Find the marginal revenue for the given production levels values of x Hint Solve the demand equation for p and use R x a 1000 units b 3000 units c 3500 units R x a Choose and fill in the correct response for x 1000 OA The marginal revenue at 1000 units is OB The marginal revenue at 1000 units is OC The marginal revenue at OD The marginal revenue at b Choose and fill in the correct response for x 3000 per production level production levels per 1 units is 1000 production levels per 1 units is 1000 per production level OA The marginal revenue at OA The marginal revenue at OB The marginal revenue at 3000 units is OC The marginal revenue at 3000 units is OD The marginal revenue at c Choose and fill in the correct response for x 3500 units is 3000 production levels per 1 production levels per 1 per production level units is 3000 per production level units is 3500 production levels per 1 TE

QUESTION 6 Linda has 1200 to invest She may invest at 6 compounded monthly for 5 years or at 6 2 compounded semi annually for 4 5 years Which investment should she m Write your responses Show your work for both situations and then state your answer For the toolbar press ALT F10 PC or ALT FN F10 Mac v T A 3 I X

QUESTION 1 A term deposit of 10 months at 4 per year paid 82 simple interest on maturity Calculate the principal invested Round your answers to 3 decimal places For example if your answer is 500 2314 round to 500 231 QUESTION 2 Stefan cashed a 1758 simple interest CSB with an annual rate of 5 He received 874 in interest during the time he held the bond How long did he hold the bond in years Round your answer to 1 decimal place For instance if it is 10 231 years then your answer would be 10 2 years QUESTION 3 John s simple interest savings account had a balance of 1203 during the month of January At the end of the month he received 1 39 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

For the given function a find the slope of the tangent line to the graph at the given point b find the equation of the tangent line f x x 3 at x 2 a The slope of the tangent line at x 2 is

4 Hadley puts 300 in a savings account earning 1 annual interest and 300 in an investm account that averages 5 annual returns The graph below shows the balance in those accounts I over 20 years The dashed line reflects the change in price of a 300 item due to 2 annual inflation P a a Approximately how much has Hadley s initial investment grown over 20 years Include both the dollar value and percent change return on investment 5 The real rate of return on an investment is the annual rate of return after taking into account the impacts of inflation It more accurately reflects the purchasing power of your money You can calculate it using the formula below where nominal rate is the given rate of return 1 Nominal Rate 1 Inflation Rate What is the real rate of return on Hadley s investments Refer back to question 4 Real Rate of Return b What is the real rate of return on Hadley s savings c How does the graph show the impact of inflation on the value of Hadley s savings over time d Question 4 used the equations y 300 1 05 and y 300 1 01 to represent Hadley s savings and investment balances over time respectively Rewrite these equations to represent their account balances based on their real rate of return

Marsha needs to have a surgical procedure done and does not have the 4 000 cash necessary for the operation Upon talking to an administrator at the hospital she finds that it will accept MasterCard VISA and Discover credit cards All of these credit cards have an APR of 15 so she figures that it does not matter which card she uses even though she plans to take a year to pay the loan Assume that Marsha makes a payment of 500 and then receives a bill Show the interest from credit cards of 15 APR according to the previous balance adjusted balance and average daily balance methods Assume that the month has 31 days and that it takes 14 days for Marsha s payment to be mailed and recorded Round your answers to the nearest cent MY NOTES previous balance method adjusted balance method average daily balance method ASK YOUR TEACH

Mortgage payments Principal 180 000 00 Interest Monthly Rate Payment 3 5 5 6 808 966 1079 A 9 000 B 167 760 C 180 000 D 347 760 How much money will be spent in interest alone over the course of the 5 30 year mortgage described in the table

Use the method of sealed bids to complete the table Karl and Friedrich have inherited their father s copy of a book and want to decide who should receive it Bid on book Fair share of estate Item obtained with highest bid 9 33 000 a Karl C Friedrich 35 000 b P 1 2 d

9 1000 componen semi ananya HOW HUGH Rore uves the better investmen 3 marks earn 3 marks Jack won 1 000 000 and Invested it at 6 25 compounded daily How much does the money earn in a 30 day month 2 marks 10 Irene s investment of 400 returned 445 55 after it was compounded monthly at a rate of 3 6 How long in years was Irene s money invested 2 marks 11 At what annual rate compounded semi annually will 250 return 271 67 after 2 years 2 marks

7 Tanla borrows 4100 00 for 9 years at 5 9 per annum compounded semi annually 2 marks How much interest is paid over the life of the loan 8 3 Which is the better investment for 8 years 1500 compounded monthly at 4 8 or 1500 compounded semi annually at 4 9 How much more does the better investment 3 marks earn 3 marks

Determine the amount of each Investment a c 30000 at 3 compounded quarterly for 15 25 years 8 3 3300 at 6 compounded monthly for 8 5 years 600 at 4 compounded daily for 1000 days 6 marks

A car dealer carries out the following calculations List price Options Destination charges Subtotal 5 368 00 1 625 00 200 00 7 193 00 431 58 2 932 00 4 692 58 2 252 44 6 945 02 144 69 Tax Less trade in F Amount to be financed 12 interest for 48 months Total MONTHLY PAYMENT What is the annual percentage rate Round your answer to one decimal place

Round your answer to the nearest dollar Make a 5 offer on a Ford Escort that has a sticker price of 12 793 53 and a dealer cost of 12 012 70

Find the cost of the monthly rent for a two bedroom apartment in 30 years assuming an inflation rate of 5 compounded continuously if the current rent is 840 Round your answer to the nearest cent

If Rita receives 49 94 interest for a deposit earning 6 simple interest for 220 days what is the amount of her deposit Round your answer to the nearest cent

rendan deposits 150000 into a fund In 2 years 5 months and 24 days the balance in Brendan s account is 174965 17 What rate j4 was rendan earning on his money if the exact method was in effect

2 8 Which investment will be worth the more in 5 years Justify answer with calculations a 150 at 25 simple interest annually 5 b 100 at 25 compound interest annually

Question 23 Find the commission Round to the nearest cent Sale 2900 Commission rate 6 Commission amount

The balance on a credit card that charges a 10 5 APR interest rate over a 1 month period is given in the following table Days 1 3 150 initial balance Days 4 20 200 50 purchase Days 21 30 50 150 payment What is the finance charge on the average daily balance for this card over this 1 month period finance charge Round to the nearest hundredth Enter

May 31 6 28 50 PM Yaritza has a collection of vintage action figures that is worth 320 If the collection appreciates at a rate of 2 per year which equation represents the value of the collection after 5 years OV 320 1 0 02 5 OV 320 1 0 02 5 OV 320 0 02 5 300 10 215 Submit Answer

Natalie has decided to invest 2600 at the end of every six months for the next five years in an account that pays 6 4 per annum compounded semi annually Determine the amount of the annuity

Gavin plans to buy a used car He can afford to make payments of 310 each month for a maximum of three years The best interest rate he can find is 8 1 per annum compounded monthly What is the most he can spend on a vehicle olhar press ALT F10 PC or ALT FN F10 Mac

Shawn deposits 750 at the end of every three months in his account earning 4 2 annually compounded quarterly What will be the balance in the account after 4 years For the toolbar press ALT F10 PC or ALT FN F10 Mac

A person wants to borrow 5 000 at 1 interest rate for 5 years The equation to use to determine the total finance charge would be what A 5 FC X 01 x 5 000 B 5 000 FC X 01 x 5 C 01 FC x 5 000 x 5 D FC 5 000 x 01 x 5

Question 15 Use the distributive property to simplify the expression 4 2 8

100 Series 1 bond which was purchased in June 1999 You are curi ous to see how much it has grown as of January 2023 Enter the information into the web site below What is the value of the bond in January C 0 00 0 17 Speed 1x Savings Bond Calculator The U S Treasury s savings bond calculator Source https www treasurydirect gov BC SBCPrice Paused 7

What is the actual interest rate needed for an investment of 10 000 to double have a value of 20 000 by the end of 15 years Assume that the Interest is compounded daily Compound Interest Calculator Compound interest calculator finds compound interest earned on an in vestment or paid on a loan Source https www calculatorsoup com calculators financial compound interest calculator php

to the amount indicated on the date of the last deposit Each deposit is made at the end of the compounding period a An amount of 1250 in 3 years at 4 8 compounded annually b An amount of 12 000 in 9 years at 5 25 compounded semi annually c An amount of 1500 in 2 years at 6 compounded monthly d An amount of 4500 in 5 years at 7 compounded quarterly e An amount of 1700 in 2 5 years at 5 3 compounded monthly f An amount of 5000 in 6 5 years at 4 9 compounded quarterly 4 Matt wants 4000 in an account 3 years from now He considers monthly or semi annual deposits Matt can invest his money at 5 compounded monthly or at 5 2 compounded semi annually a Calculate Matt s monthly deposit for the monthly option b Calculate Matt s semi annual deposit for the semi annual option c Which option should Matt choose Explain 5 Renee is saving for a trip to Australia She wants 10 000 in 5 years How much should Renee deposit at the end of each month into an account that pays 6 4 compounded monthly 6 Suppose you make a deposit at the end of each month into an account that pays 7 6 compounded monthly for 7 years The amount at the end of the 7 years is 10 000 How much do you invest Answers 1 a 7153 29 c 9639 51 2 a 929 46 3666 70 3 a 397 29 c 58 98 e 53 12 b 5218 54 d 10 625 56 b 2342 60 d 7215 02 b 530 08 d 189 86 f 164 47 4 a 103 22 b 624 63 r Monthly option because Matt has to deposit less money

Valerie and Ibrahim plan to send their son to university To pay for this they will contribute 8 equal yearly payments to an account bearing interest at the APR of 2 5 compounded annually Five years after their last contribution they will begin the first of five yearly withdrawals of 40 900 to pay the university s bills How large must their yearly contributions be

Ten people were surveyed to find out which type of movie released last year was their favorite Seventy percent of those surveyed chose a comedy as their favorite movie Which of the following statements is true The survey was not accurate The survey should have included action films The survey did not reflect the population ranging from 15 21 years The survey did not reflect a large enough sample

You buy stock on margin in your brokerage account when it is trading at 20 89 per share You have 1800 in equity cash in your account and buy 215 shares Your broker makes a margin loan so you can pay the difference at an annual rate of 0 0525 One year later the stock price is 30 48 What is the paper profit or loss on the trade as a percentage O 1 1705 O 1 2271 O 1 0670 1 2932

The annual interest rate on a credit card is 13 99 If apayment of 100 00 is made each month how many months willit take to pay off an unpaid balance of 2 360 15 Assume that no new purchases are made with the credit card

The population of Nigeria can be modeled by the function P t 279 1 0 0251 where P t measures the population in millions and t represents the number of years since 2000 1 Using this model what was the population of Nigeria in 2007 0 2 Predict the population of Nigeria in 2019 3 If this growth rate continues in what year will the population of Nigeria reach 2 billion people

Securities trading on the Primary market would include all BUT O shares trading on the NYSE or Nasdaq mutual fund shares seasoned equity offerings Onew bond issues

is the amount of money paid on the home at the time of purchase O down payment O security deposit O collateral

DATE October 5 2007 SIGN HERE INTELLER S PRESENCE FOR CASH RECEIVED TOTAL FROM OTHER SIDE How much currency was deposited co TOTAL 61 06 LESS CASH RECEIVED 9124 6027 486586519 30937 3620000 108 NET DEPOSIT 61 06

27 George is in an at fault accident where he injures five pedestrians The bodily injury of damages suffered by the pedestrians are as follows one at 200 000 and four at 50 50 000 each George also did 8 000 damage to a parked car The limits on George s Personal Auto Policy are 100 000 300 000 50 000 How much should George s Personal Auto Policy pay for these claims 308 000 408 000 358 000 458 000 For 2 points

Selling price of home 80 000 Down payment 5 000 Total cost of interest Principal loan 75 000 Rate of interest 5 What is the total cost of interest Round your answer to the nearest cent Years 30 Monthly mortgage payment 402 62

Find the future value at 3 6 interest compounded continuously for 9 years of the continuous income stream with rate of f t 2 700 e0 07t

Marcus receives an inheritance of 6 000 He decides to invest this money in a 14 year certificate of deposit CD that pays 5 5 interest compounded monthly How much money will Marcus receive when he redeems the CD at the end of the 14 years Marcus will receive Round to the nearest cent

Write a function in terms of t that represents the situation A population of 100 000 decreases by 2 each year y

Sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income before income tax expense Income tax expense Net income Comparative Income Statement For the Years Ended December 31 Current Previous year Amount year Amount Decrease Amount Decrease Percent 2 240 000 2 000 000 1 925 000 1 750 000 315 000 250 000 152 500 125 000 118 000 100 000 270 500 225 000 44 500 25 000 17 800 10 000 26 700 15 000 percentage increase in calor Increase Increase 1 b The net income for Winthrop Company increased between years This increase was the combined result of an and a in cost of goods sold The cost of goods sold increased at a percentage rate than the increase in sales thus causing the percentage increase in gross profit to be in salles than the