TEST#3 IN CLASS REVIEw PROBLEMS h. An account pays 9% compounded quarterly, what
ID: 3148436 • Letter: T
Question
TEST#3 IN CLASS REVIEw PROBLEMS h. An account pays 9% compounded quarterly, what is the equivalent annual rate if compounded weekly? 2, How long will it take $2400 to become S3500 at 6% compounded monthly? Give answer in years. 3, What is the effective interest rate at which $380 grows to $500 in 3 years if it is compounded weekly? AA loan of $6300 is taken out today. It is to be repaid in 2 payments, $4000 in 15 months and a final payment of $2700. If interest is 10% compounded monthly when is the final payment due? 5, What is the nominal rate of interest compounded monthly if $480 grows to $620 in 2 years 4 months? You contribute $1200 at the end of each year for 12 years into a trust account that earns 5.25% compounded annually. How much is in the account after your last deposit? How much is in the account S years after your last deposit? 7, You put $110 per week into an account with a nominal rate of 2.8% compounded weekly. How much do you have after 3 years? How much interest did you earn? SL You want to withdraw $200 at the end of every month for the next 3 years. If your account has a nominal rate of 6% compounded monthly how much do you need in your account today? How much interest did you earn over the 3 years? 9, You want to take a trip across Europe in 4 years and estimate the cost to be $3800. How much do you need to deposit at the end of each month if your account has a nominal rate of 4.8% compounded monthly? 10, After discovering the power of compound interest in your college math class you've decided to start saving for your retirement now. You would like to have $1.8 million when you retire. How much do you need to deposit at the end of each year at a nominal rate of 8% compounded annually if you want to retire in 40 years? How much interest did you earn? 11, Since its been such a hard semester you decide to take a vacation to Hawaii over the winter break. Since this is a last minute thing you didn't have a chance to save any money so you take out a loan for $4500 at nominal rate of 10.4% compounded weekly. what will be your weekly payments if you the loan is for 3 years? 12, You are looking to buy a car. You have $3000 for a down payment and can afford to make monthly payments of $200. The bank can give you a 5 year loan with a nominal rate of 4.8% compounded monthly. How much can you afford to spend on a car? 13, How long will it take $150 deposited at the end of each month to grow to S3800 at 7.2% compounded monthly? 14, How many quarterly payments of $600 are required to repay a loan of $7200 at 8% compounded quarterly?
Explanation / Answer
Hi,
Compound interest formula is given by
A=P(1+r/n)nt where r is the interest rate, A is the future amount, P is principal and n is number of times interest compounded per year
5. given P=480, A=620
n=12 and t=2years 4 months i.e 2.16 years
i.e 620=480(1+r/12)12*2.16
1.291=(1+r/12)25.6
i.e r ~ 12% annually
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