MTH112HW2-CompoundImterest.docx - October University for...

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October University for Modern Sciences & Arts (MSA) Faculty of Management Sciences MTH112/HW#2 Name ________________________________ ID ______________ Class ________ HW#2 Compound and Continuous Compound Interest Goal : To solve problems involving compound interest (Unless otherwise noted, round monetary answers to the nearest dollar, percents to two decimal places when written as a percentage, and time to the nearest year.) 1. If $5000 is invested in an account that pays 2% annual compounded interest, compare the amount in the account after 10 years if the interest is compounded: a) semiannually (twice a year) b) quarterly ( four times a year) c) monthly (twelve times a year) d) continuously 2. You are saving for the down-payment on a house and plan to buy the house in 5 years. How much would you need to invest in an account that pays 4.5% compounded monthly in order to have $10,000 for your down-payment? 3. Joe has inherited $6000 and would like to use the money for buying property. If he needs $7000 for the investment, how long would he have to wait to buy property if he invests the money in an account that pays 3.5% compounded weekly?
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