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Exam 1 practice problems

Exam 1 practice problems - IT 45000 Practice Problems Ch...

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IT 45000 Practice Problems Ch. 1-2 1. You took out a $1500 loan 6 years ago and the loan payoff amount now is $1850. At what simple interest rate per year did you borrow the money? 2. If problem 1 was compound interest per year, at what rate did you borrow the money? 3. You expect to buy a new car upon graduation, 4 years from now. Current statistics indicate that the average price of a new car in 4 years will be $25,000. How much money must you invest now at 7% per year, if you want to have enough to buy the car upon graduation? 4. An investor has an option to purchase a tract of land that is worth $6,302 now. If the value of the land increases at 8% per year, estimate how many years must pass for the tract’s value to be $10,000. 5. Suppose you make 15 equal annual deposits of $1000 each into a bank account paying 5% interest per year. The first deposit will be made one year from today. How much money can be withdrawn from this account immediately after the 15 th deposit?
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