[28] How many years will it take $300.00 to accumulate to $425.29 at 7% compounded monthly?
[29] An investment of $1,500.00 made 27 months ago is now worth $1753.48. What nominal rate of interest, compounded quarterly, did this investment earn?
[30] You have always wanted to go to Orlando, Florida. You estimate you will need $6,000 for your trip. You deposit your tax refund of $5,016.10 into an account that pays 12% compounded monthly. How many years will it take to reach $6,000?
[31] You put $5,000 into a 3-year term deposit that pays interest at 6.3% compounded quarterly. After the end of the three years you renew the term deposit plus accumulated interest at 7.2% compounded semi annually for an additional three years.
(a) How much money will you have at the end of the six years?
(b) How much interest did you earn?
[32] You borrowed some money from the Honest Shark Finance Co. You made only one payment of $25,292.49 at the end of 5 years to pay off the loan. The interest rate was 18.5% compounded semi annually for the first 2 years and 19.6% compounded quarterly for the remaining years.
(a) How much did you borrow?
(b) How much interest did you pay?
[33] You are going to purchase a car and are given two options to pay.
- You can pay $18,000 in cash today, or
- $5,000 after one year, and a second payment of $15,000 in 2 years (from today).
Which option is better? Your answer should be stated in terms of today’s dollars. The prevailing interest rate is 7% compounded monthly (j12 = 7%).
[34] You have a line of credit that charges interest at j12 = 8%. You borrowed $4,000 six months ago and $2,000 two months ago. You would like to repay the loan with a single payment in 6 months time. Calculate the size of the payment. Use 6 months as the focal date.
[35] Repeat the above question with you making two equal payments at six and twelve months. Find the size of the equal payments. Use 6 months as the focal date. Note: To save time use some of the values you calculated above since the focal date is the same.
[36] You purchased a machine for your plant and the contract calls for equal payments of $12,000 in 12 months and 24 months. Your cash flow is better than you projected so you would like to repay the loan early with a single payment today. Calculate the size of the payment if interest is 9% compounded semi annually. Use today as the focal date.
[37] Repeat the above question with you making two equal payments, one today and one in six months time. Find the size of the equal payments. Use today as the focal date. Note: To save time use some of the values you calculated above since the focal date is the same.
[38] You were supposed to pay $5,000 today. Up until yesterday, you had the money but you lost it all gambling at the Great American Casino. You arrange with the bank to defer the payment. You will pay $2,000 at the end of 18 months and 3 equal payments at the end of 24 months, 30 months, and 36 months. The interest rate is 10% compounded quarterly (j4 = 10%).
(a) Find the size of the equal payments. Use 30 months as the focal date.
(b) How much interest did you pay as a result of gambling and losing the $5,000?
[39] You borrowed $12,000 2.5 years ago. You agreed to repay the loan with one payment 15 months from today, and a second payment, $3,000 larger than the first, 27 months from today. Find the size of each payment if money is worth 11% compounded quarterly. Use 27 months as the focal date.
[40] You have $10,000 to invest today. How much would you have (to the nearest $100) at the end of 30 years if your money earns:
(a) 12% interest, compounded monthly?
(b) 12% simple interest?
(source)