Overview
6. Suppose you invest $5000 at a 1.15% APR.
a) Create a table to display the interest and total amount for the first 5 years under simple interest. b) Create a table to display the interest and total amount for the first 5 years under compound interest
annually. c) Create a table for the difference in the results for the interest and total amount due for each of the 5 years
found in answers a and b.
7. Suppose you invest $286.44 in an account earning simple interest. Find how much you will have in the account after 1 year, 5 years, 10 years, and 40 years under the following interest rates.
a) Rate of 1.1% b) Rate of 3.9% c) Rate of 6.4%
d) Rate of 9.35%
8. Suppose you invest $286.44 in an account earning compound interest annually. Find how much you will have in the account after 1 year, 5 years, 10 years, and 40 years under the following interest rates.
a) Rate of 1.1% b) Rate of 3.9% c) Rate of 6.4%
d) Rate of 9.35%
9. Suppose you invest $1500 in an account that compounds interest with an APR of 3.25%. Find the total amount in the account after 1 year, 5 years, and 50 years for the following compounding periods. (create a table to keep track of the results).
a) Annually b) Semi-Annually c) Quarterly d) Monthly e) Weekly f) Daily
g) Continuously 10. Find the Annual Percentage Yield for an account earning 4.25% compound interest for the following compound periods.
a) Annually b) Semi-Annually c) Quarterly d) Monthly e) Weekly f) Daily g) Continuously
h) In which account did you earn the highest interest rate? 11. What is the limit that a %1 investment could grow to if you earn 100% compound interest in 1 year?
12. Suppose you invest $4325 in an account earning compounded interested compounded continuously. Find how much you will have in the account after 1 year, 5 years, 10 years, 20 years and 40 years under the following interest rates.
a) Rate of 1.1% b) Rate of 3.9%
c) Calculate the Annual Percentage Yield for each of the rates above if interest is compound continuously (hint: use an extremely large compound period)
13. What is the future and present value of an investment? 14. What is the difference between a Lump Sum and an Annuity? 15. What is discounting?
16. Present Value Calculations: How much would you need to invest today in an account earning 3.2% compound interest if you would like the account to grow to $25000 in 18 years under the following compound periods.
a) Annually b) Semi-Annually c) Quarterly d) Monthly e) Weekly f) Daily g) Continuously