1. Using the formula for simple interest and the given values, find I.
P=$200; r=6%; t=4 years; I=?
I = $48
2. Using the formula for simple interest, I=Prt, to find the indicated quantity.
I=$36; r=6%; t=3 months; P=?
P = $2400
3. Determine the present value P you must invest to have value A at simple interest rate r after t.
A=$2000.00, r = 14.5%, t=26 weeks
4. A radio commercial for a loan company states: “You only pay 29 cents a day for each $500 borrowed. “ If you borrow $1,922 for 235 days, what amount will you repay, and what annual interest rate is the company actually charging? (assume a 360-day year)
a. Amount you repay = $2183.97
b. Annual interest rate = 20.8800%
5. Use the compound interest formula to find the future value A for the following values.
A = $1502.72
6. Given the annual interest rate and the compounding period, find i, the interest rate per compounding period.
8% compounding monthly
I = 0.667% per month
7. Given the rate per compounding period, find r, the annual rate.
4.325% per quarter
R = 17.300%
8. A newborn child receives a $5000 gift toward a college education from her grandparents. How much will the $5000 be worth in 18 years if it is invested at 6% compounded quarterly?
It will be worth $14605.79
9. Find I (the rate per period) and n (the number of periods) for the following annuity.
Quarterly deposits of $1,100 are made for 5 years into an annuity that pays 6% compounded quarterly.
I = 0.0150
N = 20
10. Recently, More Money 4U offered an annuity that pays 5.1% compounded monthly. If $922 is deposited into this annuity every month, how much is in the account after 4 years? How much of this is interest?
Type the amount in the account: $48978
Type the amount of interest earned: $4722
11. A company estimates that it will need $157,000 in 9 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 5.4% compounded monthly, how much should each payment be?
The amount of each payment should be $1132.16
12. Solve the following problem
PV=$23,897; n=92; i=0.035; PMT=?;
PMT = $873.26
13. American General offers a 14 year-year annuity with a guaranteed rate of 4.81% compounded annually. How much should you pay for one of these annuities if you want to receive payments of $900 annually over the 14 year period?
How much should a customer pay for this annuity?
14. You want to purchase an automobile for $27,046. The dealer offers you 0% financing for 60 months or a $4974 rebate. You can obtain 6.3% financing for 60 months at the local bank. Which option should you choose?
___ 0% financing
How much money will you save per month?
15. Construct the amortization schedule for a $14,000 debt that is to be amortized in 10 equal payments at 6% interest per half-year on the unpaid balance.
Fill out the amortization schedule below. Round all values to the nearest cent
Payment Number Payment Interest Unpaid Balance Reduction Unpaid Balance