Assignment Worksheet
Online Homework System
3/30/21 - 2:02:00 AM EDT
Name:
____________________________
Class:
MAT 143 Online 2021SP
Class #:
____________________________
Section #:
____________________________
Instructor: Thomas Killoran
Assignment: 3-1B
Question 1: (1 point)
Compound Interest
A bank account was opened with a deposit of $1,800 at an APR of 20% compounded one of the following ways. Find the amount in this account after 13 years with compounding of:
(round answers to nearest penny)
Annually
____________
Semi - Annually
____________
Quarterly
____________
Monthly
____________
Weekly
____________
Daily
____________
Let n = 1,000
____________
Use the Formula:
F = Pe
rt
to find the answer to continuous compounding rate for the above problem:
____________
Question 2: (1 point)
Compound Interest
One of the more difficult things to find with Compound Interest is the Time it takes to accumulate a compounded balance.
For instance if you were to deposit $3,350 into an account that earns 8.8% compounded quarterly, then how long would it take for that account to be worth $12,362?
To tackle this problem a formula to find time is given. You just need to type this into your calculator to find the answer. The LOG button should be on the left side of your TI 30 XII s calculator (near the 2nd button).
t=log(F/P) ÷ (n*log(1+r/n))
____________ years
t =
Question 3: (1 point)
Compound Interest
Jack's monthly budget is $4,250. Jack's financial advisor says for retirement Jack will need about 75% of the monthy expenses adjusted for inflation which usually averages 5.7% per year.
How much money will Jack need per month 24 years from now for retirement?
____________ Round to the nearest whole dollar.
Remeber to take the 75% of the Compound Interest Answer or of the Principle before you calculate.
How much money will Jack need per month 24 years from now for retirement?
____________ Round to the nearest whole dollar.
Question 4: (1 point)
Compound Interest
Karen put $3,300 into a bank that offered 4.1% interest rate compounded annually. Karen kept the money in this account for 5 years.
How much money is in this account after the first 5 years?
____________
After this time Karen then moved all this money to a new account that offered 5.1% interest rate compounded semi-annually for another 13 years.
How much money does Karen have now?
____________
Question 5: (1 point)
Compound Interest
Professor Jarrad has invented a time machine and is going to travel back in time 20 years to buy his wife a diamond ring. The ring cost $3,500, 20 years ago . The average rate of inflation averaged 3% per year for this time period.
Round answer to the nearest dollar.
How much money would Professor Jarrad have to pay for the same ring today?
____________
How much money will Professor Jarrad save by purchasing the ring in the past using the time machine?
____________
Question 6: (1 point)
Compound Interest
A car today costs $22,300. Assume that the average annual rate of growth of inflation per year was 4.5% over the last 5 years to answer the following question.
Round answers to the nearest dollar.
How much future money will the same type car cost 5 years in the future?
____________
How much would the same type of car have cost 5 years ago?
____________ Round to the nearest dollar.
Question 7: (1 point)
Compound Interest
Karen's grandmother left $27,532 from an account that earned 5% interest compounded quarterly for Karen's inheritance. The account initial, and only, deposit was 46 years ago and had a fixed interest rate the whole time.
What does the "n " become in the compound interest formula?
n =
____________
What is the "nt " for the compound interest formula?
nt =
____________
How much money did Karen's grandmother initially deposit 46 years ago?
____________ Round to the nearest dollar.
Question 8: (1 point)
Compound Interest
Steven is going to deposit $1,050 into an account that earns 19.9% APR compounded semi-annually.
What does the "n " become in the compound interest formula?
n =
____________
Steven wants to know how much money will be in this account 4 months from now.
What will the time be in years to do this calculation?
____________ Write answer as a fraction if necessary.
How much money will Steven have in this account 4 months from now?
____________
How much of this amount is from interest earned?
____________
Question 9: (1 point)
Compound Interest
A bank advertises a savings account that earns 6.3% APR compounded monthly.
What is the value of "n " for the compound interest formula?
n =
____________
What is the APY rate for this loan?
____________ % Round to the nearest 100th of a percent.
Question 10: (1 point)
The Use of APY compared to APR
Frodo is going to deposit $2,300 into an account that earns 11% APR compounded monthly.
What does the "n " become in the compound interest formula?
n =
____________
How much money will Frodo have in this account one year from now?
Compound Interest: ____________
What is the APY rate for this loan?
____________ %
Use the formula for simple interest for one year with the APY rate to calculate the Future Value.
Simple Interest with APY: ____________
The difference between the Compound Interest calculation and the Simple Interest calculation is $0.04
So with a simple interest rate, people can estimate how much they will earn in one year by doing a simple calculation:
interest = 2,300 ⋅ 0.1157