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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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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 Spring '07
 Lumchuck
 Payment, Deposit account, c. Compounded quarterly

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