Compound Interest Assignment



Simple Interest Assignment Name:__________

1. Explain what the different variables in the formula [pic]represent.

2. Find the amount of each deposit.

|Principal |Rate per Year |Time |Interest |Amount |

|$2200 |9% |3 years | | |

|$1750 |8% |6 months | | |

|$325 |9.5% |12 weeks | | |

|$1617 |12% |90 days | | |

|$525 |[pic] |1 month | | |

3. For each investment find the missing information.

|Principal |Rate per Year |Time |Interest |Amount |

|$700 |8% |2 years | | |

|$1200 | |3 years |$210 | |

|$624.34 |9.25% | | |$941.97 |

| |10.5% |4.25 years |$500 | |

| | |32 weeks |$76.95 |$824.31 |

|$10000 | |2 months |$1250 | |

4. A fishing company obtains a loan of $14,500 to purchase new equipment. If the interest rate is 9.5% annually, how much money is to be paid back after 6.5 years?

5. Lori borrows $2770 from a bank. How much interest will be paid in 3 years if the interest rate is 10[pic]% per annum?

6. Chris wants to buy a scooter for $1150. He can put $740 in the bank now at an interest rate of 10% per annum. In how many years will he be able to buy the scooter?

7. Jim borrows $1947.34 to buy a laptop computer. How much interest at 9.5%, will Jim have paid in 3 years?

8. Jeff wants to buy a ski-boat. The engine alone will cost $3995. If Jeff invests his $3000 summer earnings, what rate of interest will allow him to buy the motor in 3 years?

Compound Interest Assignment

1. Substitute the values of each investment into

the formula A = P(1+ i)n. Use a calculator

to evaluate.

a) $400 at 6% per year, compounded annually, for 5 years

b) $1800 at 8.4% per year, compounded semi-annually, for [pic] years

c) $2150 at 1.2% per year, compounded monthly, for 19 months

d) $10 800 at 8.4% per year, compounded quarterly, for 14 years

2.  Renata invested $15 000 at 6% per year, compounded monthly, for [pic] years.

Calculate the amount of interest she earned on her investment.

3. Jonathan borrows $9000 from a financial institution for the purchase of a used car.

The terms of the loan require Jonathan to pay interest at 4% per year, compounded semi

annually, and repay the total amount at the end of 2 years.

a) How much does Jonathan need, to repay at the end of 2 years?

b) How much interest does this repayment include?

4. Find the value of a $4600 investment at 8% per year for 4 years if interest is compounded

a) annually

b) semi-annually

c) quarterly

d) monthly

e) weekly

5.  When Marta was 5 years old, her parents invested $12 000 for her in a plan that earns 6% per year, compounded semi-annually.

How much will the investment be worth when Marta is

a) 12 years old? b)18 years old?

6. A $950 investment is made at 10% per year, compounded quarterly. How much interest will the investment make in the

a) 5th year? b) 10th year?

 9. Minh needs a loan of $7000 for 6 years.

a) Which plan will require him to pay the least amount of interest?

Plan A: 10% per year, compounded semi-annually

Plan B: 8.1% per year, compounded quarterly

b) Calculate the difference in the amount of interest between the two plans.

10. Ray invested $25 000 in a plan that paid 2% per year, compounded quarterly, for 3 years. At the end of the 3 years, he re-invested the total amount earned in the previous plan into a new investment that paid 5% per year, compounded semi-annually, for another 2 years. At the end of the 2 years, he re-invested the total amount into a third plan that paid 6% per year, compounded monthly, for 3 years.

a) How much did he have at the end of the first investment?

b) How much did he have at the end of the second investment?

c) How much did he have at the end of the third investment?

d) How much interest did he earn in total?

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