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Homework answers / question archive / Section 5

Section 5.1

1)*$35,000 at 6% for 9 months*

2.)* $1,875 at 5.3% for 7 months*

3.)* $8940 at 9%;loan made on May 7 and due September 19*

4.)* $3,475 loan at 7.5% for 6 months*

5.)* $48,000 for 8 months;money earns 5%*

6.)*One-month $12,750 T-bill with discount rate of .070%*

7.) An accountant for a corporation forgot to pay the firm’s income tax of $725,896.15 on time. The government charged a penalty of 9.8% interest for the 34 days the money was late. Find the total amount (tax and penalty) that was paid.

8.)* *

What is the time period of a $10,000 loan at 6.75%, in which the total amount of interest paid was $618.75?

9.* *

Jerry Ryan borrowed $8000 for nine months at an interest rate of 7%. The bank also charges a $100 processing fee. What is the actual interest rate for this loan?

10.) $1000 at 6% compounded annually for 10 years

11.) $15,000 at 4.6% compounded semiannually for 11 years

12.) AloStar Bank of Commerce: $1000 at .85% compounded daily for 1 year

13.) Third Federal Savings and Loans: $150,000 at 1.15% compounded quarterly for 5 years

14.) $9000 grows to $17,118 in 16 years

15.) $15,000 at 2.9% for 10 years

16.) 10- year bond at 4.1%; price $13,328

17.) 4.7% compounded semiannually

18) $8500 at 6% compounded annually for 9 years

19.) 20-year $15,000 bond’ interest at 5.3%

20.) A developer needs $80,000 to buy land. He is able to borrow the money at 10% per year compounded quarterly. How much will the interest amount to if he pays off the loan in 5 years?

21.) In the Capital Appreciation Fund, a mutual fund from T. Rowe Price, a $10,000 investment grew to $11,115 over the 3-year period 2010-2013. Find the annual interest rate, compounded yearly, that this investment earned.

Section 5.3

22.)* R=$20,000, 4.5% interest compunded annually for 12 years. *

23.) $500 per month invested at 5%, compounded monthly, for 20 years; then $1000 per month invested at 8%, compounded monthly, for 20 years.

24.)* $100,000 to be accumulated in 15 years;quarterly payments of $1200*

25) Payments of $1050 for 8 years at 3.5% compounded annually

26.) Payments of $25,000 for 12 years at 6% compounded annually

27.) $12,000; annual payments for 6 years; interest rate 5.1%

28)* *

Ian Morrison, a 30-year-old professional, invests $250 a month in the T. Rowe Price Income fund, which has a 10-year average return of 8.75%.

- Ian wants to estimate what he will have for retirement when he is 65 years old if the rate stays constant. Assume monthly compounding.

- If Ian makes no further deposits and makes no withdrawals after age 65, how much will he have for retirement at age 75? Assume monthly compounding.

29. A grandmother opens an investment account for her only granddaughter on the day she was born, investing $500. Each year on her birthday, she deposits another $500, making the last deposit on her 25^{th} birthday. If the account paid a return rate of 6.2% compounded annually, how much is in the account at the end of the day on the granddaughters 25^{th} birthday?

Section 5.4

30) Payments of $890 each year for 16 years at 6% compounded annually.

31) Yearly withdrawals of $1200 for 14 years; interest rate is 5.6% compounded annually.

32.) $45,000; monthly payments for 11 years; interest rate is 5.3%, compounded monthly.

33.) Find the lump sum deposited today that will yield the same total amount as payments of $10,000 at the end of each year for 15 years at each of the given interest rate:

4% compounded annually. * *

34.) $20,000 bond with coupon rate 4.5% that matures in 8 years; current interest rate is 5.9%

35.) $140,000; 12% compounded quarterly; 15 quarterly payments

36)$180,000 at 2.25% for 10 years from Roundpoint Mortgage Company

37.) Alan Stasa buys a new car costing $26,750. What is the monthly payment if the interest rate is 4.2%, compounded monthly, and the loan is for 60 months? Find the total amount of interest Alan will pay.

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