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Supplement__7_Interest___Annuities

# Supplement__7_Interest___Annuities - Analytical Methods...

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Analytical Methods Name ____________________________ Interest and Annuities Supplement #7 1. A \$20,000 deposit is made in a certificate of deposit which matures in 5 years. If interest of 8% per year is awarded, what is the compound amount if interest is: a. Compounded annually b. Compounded semiannually c. Compounded quarterly 2. If \$60,000 is invested in a savings account which pays interest at a rate of 3.5% compounded continuously, a. What is the compound amount after 4 years? b. How long will it take to double the original investment? 3. If interest is earned at the rate of 4% per year, compounded semiannually, what amount should be deposited today if it is desired to have \$80,000 8 years from today? 4. You borrowed \$23,900 at 9% annual interest. What is the monthly payment necessary to amortize this loan over 5 years?

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5. You estimate that it will cost \$200,000 to provide a college education for your child 12 years from now (your child is now 6 years old). Calculate the monthly deposits necessary to create the sinking fund to reach this goal at 6% annual
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Supplement__7_Interest___Annuities - Analytical Methods...

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