Question

I. SIMPLE INTEREST:
 
1. How much is the amount and the accrued simple interest of $ 18,950; at 6.585% for seven years and nine months?
 
2. Find the difference between the exact simple interest and the ordinary simple interest when calculating $ 15,180 at 8.625% for 60 days?
 
3. If you deposited $ 18,750 at what%, would you accumulate an amount of $ 57,156.25 in five years?
     
 
II. COMPOUND INTEREST: (annual and parts of the year)
 
1. Find the amount and compound interest of $ 57,250 at 5 1/4% for the 10-year period calculated:
 
to. annually
b. biannually
c. quarterly basis
d. monthly
and. continually
 
2. How much money do you need to deposit in your investment account
to have $ 100,000 after twenty-five years at 5.45% interest calculated annually?
 
 
 
III. PRESENT VALUE:
 
1. Find the net present value of an inheritance to be received within 15 years of $ 90,125 discounted today at 4 3/8%.
 
2. If you accept the answer from # 1 above, what interest or higher would be accepted today to reach $ 135,000 in 20 years.
 
3. The property you bought 12 years ago for $ 185,000 is worth $ 225,000 today. What is the rate of return on your investment?
 
4. Joe Doe deposited $ 25,500 into his savings account. The interest rate is 5% compounded annually. How many years will it take for the investment to reach $ 75,000?
 
5. You have deposited $ 200,000 in equity investments, after three years, the investment balance is $ 180,900. What and how much has the rate of return been?
 
 
IV. ANNUITIES:
 
1. If you and your partner decide to open an IRA account of $ 6,500 per year each. You are offered 5 ½% annual interest for 30 years. How much will the annuity amount and accrued interest be?
 
 
V. PRESENT VALUE OF AN ANNUITY:
 
1. You are lucky to stick with the Lotus. The prize is 2 million. You have the option (1) to receive a single amount only once, (2) to receive an identical annuity each year, for 20 years. Ignore the tax. Discount rate 4.5%
1. What is the present value of option (1)?
2. What is the present value of option (2)?
3. which one would you select and why?

Answer 1

I

1)

Amount |px(1+rxt) $28,620.90 -18950*(1+6.585%*7.75)| Interest Pxrxt $ 9,670.90 -18950*6.585%*7.75

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