1. Your goal is to have $15,000 in 6 years. The rate of interest is 16% compounded annually, so how
much should you start with?
2. If my investment is $17,000 and the rate of interest is 12.5% compounded annually, what will the
value be after 8 years?
3. You borrow $250,000 at 14.5% annual rate to start up a business. The loan must be repaid back after
8 years. How much will be your total profit or loss for this period if your monthly sales would be equal to
$4,000?
4. You have $1,000, and want it to grow to $2,000 in 4 years. Compare what simple and compound
interest rates you need to achieve your goal.
5. Abdulla wants to invest 400,000 usd for a period of 8 years, he has 3 options:
•
Option A offers 1.5% compounded every month
•
Option B offers 4.5% compounded quarterly
•
Option C offers 9% compounded half-yearly
Required:
- Find and compare equivalent Nominal and Effective Annual Interest Rates
- Calculate the total amounts investor will get at the end of the period
- Advice which option is better