Drexel University



5.1 ProblemsFind the simple interest5. $25,000 at 3% for 9 months7. $1974 at 6.3% for 25 weeksFind the simple interest, assume a 360 day year9. $8192.17 at 3.1% for 72 daysFind the maturity value and the amount of simple interest earned11. $3125 at 2.85% for 7 months13. If $1500 earned simple interest of $56.25 in 6 months, what is the simple interest rate?15. Explain the difference between simple and compound interest.Find the compound amount for each deposit and the amount of interest earned19. $1000 at 6% compounded annually for 8 years21. $470 at 5.4% compounded semiannually for 12 years23. $8500 at 8% compounded quarterly for 5 yearsFind the present value25. $12,820.77 at 4.8% compounded annually for 6 years27. $2000 at 6% compounded semiannually for 8 years29. $8800 at 5% compounded quarterly for 5 yearsFind the effective rate33. 4% compounded quarterly35. 7.25% compounded semiannually 37. Amy Bastide borrowed $7200 from her father to buy a used car. She repaid him after 9 months, at an annual interest rate of 6.2%. Find the total amount she repaid. How much of this amount is interest?41. A department has ordered 8 new Dell computers at a cost of $2309 each. The order will not be delivered for another 6 months. What amount should the department deposit in a special 6-month CD paying 4.79% compounded monthly to have enough to pay for the machines at the time of delivery?43. A small business borrows $50,000 for expansion at 8% interest compounded monthly. The loan is due in 6 years. How much interest will the business pay?47. Robert Herbert wants to have $30,000 available in 5 years for a down payment on a house. He has inherited $25,000. How much of the inheritance should he invest now to accumulate $30,000, if he can get an interest rate of 5.5% compounded quarterly?49. As the prize in a contest, you are offered $1000 now or $1210 in 5 years. If money can be invested at 6% compounded annually, which is larger?51. A Web site for E*TRADE Financial claims that they have “one of the highest yields in the nation” on a 6-month CD. The stated yield was 5.46%; the actual rate was not stated. Assuming monthly compounding, find the actual rate.63. Suppose $10,000 is invested at an annual rate of 5% for 10 years. Find the future value for(a) Annual (b) Quarterly (c) Monthly (d) Daily compounding10.4 Problems35. Ron Hampton needs to choose between two investments. One pays 6% compounded annually, and the other pays 5.9% compounded monthly. If he plans to invest $18,000 for 2 years, which investment should he choose? How much extra interest will he earn by making the better choice?36. Find the interest rate required for an investment of $5000 to grow to $7500 in 5 years if the interest is compoundedAnnuallyQuarterly37. Assuming continuous compounding, what will it cost to buy a $10 item in 3 years at the following inflation rates?a. 3%b. 4%5%38. Greg Lamb invests a $25,000 inheritance in a fund paying 5.5% per year compounded continuously. What will be the amount on deposit after each time period?a. 1 yearb. 5 years10 years39. Chris Lynch plans to invest $500 into a money market account. Find the interest rate that is needed for money to grow to $1200 in 14 years if the interest is compounded quarterly.40. Rosie Hernandez puts $10,500 into an account to save money to buy a car in 12 years. She expects the car of her dreams to cost $30,000 by then. Find the interest rate that is necessary if the interest is compounded using the following methods. Compounded quarterlyCompounded continuously10.5 Problems68. Christine Lyons invests $15,000 in an account paying 7% per year compounded annually.a. How many years are required for the compound amount to at least double?In how many years will it at least triple?69. Chris Lynch plans to invest $500 into a money market account. Find the interest rate that is needed for money to grow to $1200 in 14 years if the interest is compounded continuously. ................
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