Exam 10: Compound Interest and Inflation

Solve the application problem. If no interest rate is given, assume % interest compounded daily. Round to the nearest cent. -Kerry and Andy Zell are retired and after saving their entire life, they have $290,000 in a savings account paying 3% compounded daily. What is their gain or loss in purchasing power in a year in which the CPI is 4%?

Find the present value. Round to the nearest cent. -

Use values from the compound interest table to find the compound interest. Round to the nearest cent. -$1,250 at 4% compounded annually for 10 years

Solve the application problem. If no interest rate is given, assume interest compounded daily. Round to the nearest cent. -A local business deposited $460,000 in a 2-year time deposit earning 4% compounded daily. At maturity, what is the compound amount and interest earned?

Solve the application problem. If no interest rate is given, assume % interest compounded daily. Round to the nearest cent. -A publishing company deposited $200,000 in a 2-year time deposit earning 6% compounded daily with a Chicago bank as partial collateral for a loan. Find the compound amount and the interest earned.

Provide an appropriate response. -Find the amount by which the interest compounded annually is larger than the simple interest. Round to the nearest cent. Use the formula to find the compound amount. Principal: $620 Rate: 5% Years: 7

Find the compound amount for the certificate of deposit. Assume daily compounding using the following table. Round to the nearest cent. -Amount: $4,500 Rate: 3% Years: 4

Use the table to solve the problem. Round to the nearest cent. -A bank has $550,000 to lend for 9 months. It can lend it to a local contractor at a simple interest rate of 12%, or it can lend it to a small business that will pay 12% compounded monthly. If the bank wants to maximize its interest earned, who should receive the loan and what is the additional interest earned?

Find the compound amount for the certificate of deposit. Assume daily compounding using the following table. Round to the nearest cent. -Amount: $3,112 Rate: 4% Years: 5

Provide an appropriate response. -Find the amount by which the interest compounded annually is larger than the simple interest. Round to the nearest cent. Use the formula to find the compound amount. Principal: $6,260 Rate: 6% Years: 18

Solve the problem. -A note is due in 4 years, with interest of 4% compounded semiannually. The face value of the note is $26,000. Find the maturity value of the note and find the minimum sale price of the note if money can be deposited at 8% compounded quarterly. Use the compound interest table.

Find the interest earned. Assume interest compounded daily, as in the following table, and use the exact number of days. Round to the nearest cent. -Amount: $2,200 Deposited: Jan 27 Withdrawn: Apr 5

Solve the application problem. If no interest rate is given, assume interest compounded daily. Round to the nearest cent. -On October 1, The Bakery opened a savings account with a deposit of $15,100. A withdrawal of $7500 was made 15 days later and another withdrawal of $400 was made 8 days before January 1. Find the balance on January 1.

Provide an appropriate response. -If interest is compounded monthly at 8% per year for 10 years, explain how to find the number of compounding periods and the interest rate per compounding period.

Use the table to solve the problem. Round to the nearest cent. -Barry Newman's savings account has a balance of $358. After 21 years, what will the amount of interest be at 4% compounded annually?

Use values from the compound interest table to find the compound amount. Round to the nearest cent. -$12,000 at 8% compounded semiannually for 12 years

Use the table to solve the problem. Round to the nearest cent. -Andrea Gilford's savings account has a balance of $73. After 4 years, what will the amount of interest be at 8% compounded quarterly?

Find the compound interest earned. Round to the nearest cent. Do not use an interest table. -$5,000 at 7% compounded annually for 4 years

Find the compound interest earned. Round to the nearest cent. Do not use an interest table. -$2,000 at 10% compounded semiannually for 3 years

Provide an appropriate response. -Explain the difference between simple interest and compound interest.