Math 1313
Popper 7
Which formula would you use for each of the following problems?
B. 𝐹 = 𝑃(1 + 𝑖)𝑛
C. 𝑃 = 𝐹(1 + 𝑖)−𝑛
A. 𝐼 = 𝑃𝑟𝑡
1. How much simple interest will be earned on an $800 deposit in an account that earns
2.3% simple interest per year over a period of 5 months?
2. Kyrie borrowed $3,000 from her parents to buy some furniture. Her parents will charge
her 3.25% simple interest per year. Her parents want the loan repaid in 1.5 years. How
much will Kyrie owe her parents in 1.5 years?
3. In a certain town child daycare rates have been rising at the rate of 7% per year
compounded annually. If 2 years ago the rate per week was $150, how much would you
expect to pay today for one week of daycare?
4. A large corporation has invested $1 million in certificate of deposits (CD). The CDs pay
8% per year compounded semiannually. How much will the CDs be worth in 8 years?
5. Jerry would like to purchase a new car in 4 years. He deposits $3,500 in an account that
pays 7% per year compounded monthly. How much will he have towards the purchase of
the car in 4 years?
Identify the type of problem.
A) Sinking Funds
OR
B) Amortization
6. Wang plans to retire in 38 years and would like for his Individual Retirement Account
(IRA) to have $1 million by then. If the IRA pays 8% per year compounded
semiannually, what must his semiannual payment be to achieve his goal?
7. A recently married couple is buying a condo. The original cost is $475,733.76. They
make a 25% down payment and finance the rest with a lending company. Their financing
is for 25 years at 5.75% per year compounded monthly. Find their monthly payment.
8. New Body, a gym, bought new exercise equipment on credit. The purchase price was
$10,438.88. They secure the loan with a financing company that charges 6.25% per year
compounded quarterly for 6 years. How much are their quarterly payments?
9. Clean and Press, a cleaners, anticipates they will need $15,000 in 4 years to replace some
machines. Their credit union pays 7.5% per year compounded quarterly. How much
should they invest in this account quarterly to have the desired funds in 4 years?
10. Sweet Goodies, a bakery, bought new appliances and equipment for $23,468.99. They
made a $7,000 down payment and financed the rest with a lending company. The lending
company charges 7% per year compounded monthly for 3 years. Find their monthly
payment.