Calculate the simple interest due on a four-month loan of $900 if the interest rate is 2.2% per month. GE-MM The Mathematics of Finance20. How much money should be invested in an account that earns 9% interest, compounded quarterly, in order to have$5,000 in 5 years? Round to the nearest cent.21. You borrow $7,000 to help pay your college expenses. You agree to repay the loan at the end of 4 years at 8%interest, compounded quarterly. What is the maturity value of the loan?22. A couple plans to invest money for their child's college education. What principal must be deposited by the parentswhen their child turns 7 in order to have $30,000 when the child reaches the age of 18? Assume the money earns 6%interest, compounded quarterly.23. Inflation If inflation causes the cost of automobiles to increase by 2.5% each year, what should a car cost today if itcost $21,000 5 years ago?24. Assume you are thinking of buying a house currently priced at $169,000. If housing prices rise at an annual inflationrate of 3%, estimate the purchase price of a similar house if you wait 4 years before committing yourself to buying one.25. Suppose when you are 52 years old, the yearly statement you get from the Social Security Administration estimatesthat your monthly payment at age 66 will be $620. If inflation stays constant at 2%, what will be the purchasing power ofthat $620?26. Calculate the effective annual rate for an investment that earns 7.1% interest compounded quarterly. Round to thenearest hundredth of a percent.27. What is the effective annual interest rate of an investment that pays 7.6% annual interest, compounded quarterly?Round to the nearest hundredth of a percent.28. What is the effective annual interest rate of an investment that pays 6.5% annual interest, compounded daily, assuminga 365-day year? Round your answer to two decimal places.29. The price of an item in 2004 was $1.3. Use an inflation rate of 4% to calculate its price in 2030. Round to the nearestcent.30. Calculate the purchasing power of $80,000 in 15 years using an annual inflation rate of 6%. Round to the nearestcent.31. Kim has money in a savings account that earns an annual interest rate of 2.4%, compounded monthly. What is theeffective rate of interest on Kim's account? Round to the nearest hundredth of a percent.32. What is the effective annual interest rate of an investment that pays 6.5% annual interest, compounded quarterly?33. If $14,000 had been invested in the Fictious Fund on June 30, 1995, then on June 30, 2005 the investment would havebeen worth $55,177.52. What interest rate compounded annually would this investment have earned? Round to thenearest hundredth of a percent.ual rate of 6.5% compounded continuously, find the future value after GE-MM The Mathematics of Finance1. What is the simple interest for a principal of $650 invested at a rate of 9% for 5 years?2. $4200 is invested for 9 months at an annual simple interest rate of 12%. How much interest will be earned? Round youranswer to the nearest cent, if necessary.3. Calculate the simple interest earned when P = S 14,000, r = 8.9% and * = 70 days using the ordinary method. Roundto the nearest cent.4. What is the simple interest to the nearest cent on a credit card balance of $1,150.00 at 11% interest for 3 months?5. Use the formula 4 = P(1+rt) to calculate the maturity value of the simple interest loan when P = $3400,7= 6.6% and = 2 months.6. Calculate the simple interest rate when P = $ 3600_ I = $ 160 andmonths. Round to the nearest hundredth.7. Calculate the simple interest due on a four-month loan of $900 if the interest rate is 2.2% per month.8. Andre De Quadros bought a $1500, 9-month certificate of deposit (CD) that would earn 9% annual simpleinterest. What is the value of the CD when it matures?9. Susan bought a 9-month $1400 certificate of deposit. At the end of 9 months, she received $104 simple interest. Findthe annual rate of simple interest paid. Round your answer to the nearest percent.10. The maturity value of a three-month loan of $2,500 is $2,577. Find the simple annual interest rate to the nearesthundredth.11. Calculate the compound amount using the compound amount formula when P = $3,000,7 = 9% compoundedsemiannually, and =8 years. Round to the nearest cent.12. Find the future value if $2700 is invested for 7 years at an annual rate of 9% compounded quarterly.13. What interest will be earned if $4000 is invested for 4 years at an annual rate of 7% compounded monthly?14. Calculate the future value when P= S5,000 7 = 11% compounded monthly, and = 8 years. Round to the nearestcent.15. Calculate the present value when 4 = $ 26,000 r = 9% compounded quarterly, and t = 30years. Round to thenearest cent.16. If $1,420 is invested in an account which earns 8% interest compounded annually, which will be the balance of theaccount at the end of 17 years?17. Calculate the future value of $8,000 earning 9% interest, compounded quarterly, for 11 years. Round to the nearest

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11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS