Exam 19: Compound Interest and Present Value

Jarad Rodriguez deposits $10,000 at 10% compounded semiannually. At the start of year 6, Jarad deposits an additional $5,000 that is compounded at the same rate. At the end of 10 years, what is the balance in Jarad's account?

$100,000 for 20 years compounded at 4% annually results in a rate per period of:

Mia Kaminsky wants to attend Riverside Community College. She will need to have $25,000 six years from today. Mia is wondering what she will have to put in the bank today so that she will have $25,000 six years from now. Her bank pays 5% compounded semiannually. Round to nearest dollar.

Compounding:

$20,000 for 14 years compounded at 8% semiannually results in how many periods?

Juanita Finn deposits $12,000 into Valley Bank, which pays interest of 8% compounded annually for four years. How much will Juanita have in her account?

Al Miler, the owner of Al's Garage, estimates that he will need $29,000 for new equipment in 15 years. Al decides that he will put aside the money now so that in 15 years the $29,000 will be available. His bank offers him 10% interest compounded semiannually. Al must invest today:

Present value starts with the future and tries to calculate its worth in the present.

The interest on $3,000 at 8% compounded semiannually for six years is $1,803.10.

The interest on $6,000 at 6% compounded semiannually for eight years is

John Riviera deposits $14,000 in National Bank at 8% compounded quarterly. What is the effective rate (APY) of interest?

The effective rate (APY) can be calculated by the interest for one year divided by the principal.

Effective rate (APY) is:

The number of periods in compounding is found by multiplying the number of years times the number of times compounded per year.

Compounding results in earning higher interest than simple interest.

The nominal rate is really the true rate.

The effective rate (APY) is:

The present value of $1 means that for a certain rate of interest for a certain period of time will equal:

$14,182 is the present value of $21,000 that earns at a bank 12% compounded quarterly for four years.

Sam Monte deposits $21,500 into Legal Bank, which pays 6% interest that is compounded semiannually. What will Sam have in his account at the end of six years?