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373chapter1section5

# 373chapter1section5 - compound interest During the first 4...

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Chapter 1, Section 5 19. Kwaku invests 5500 in an account earning compound interest at an annual effective interest rate of 6.25%. a. Calculate the amount of interest that Kwaku will earn in the 4th year. b. How much will Kwaku have in the account at the end of 8 years. 20. Austin borrows 800 to buy a television for his apartment. Austin’s loan uses compound interest at a rate of i . Austin repays the loan after 3 years with a payment of 1000. Determine Austin’s interest rate. 21. Alice invests 500 in an account earning compound interest at a annual effective rate of 7.5%. At the end of t years, Alice’s investment will have doubled. Determine t. (Note: t does not need to be an integer.) 22. Rose invests money in a bank account earning compound interest at an annual effective interest rate of 5%. Tim invests money in a bank account earning 10% simple interest. What year will Rose and Tim earn the same annual effective interest rate? 23. Dan invests 1000 for a period of 10 years in an account earning

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Unformatted text preview: compound interest. During the first 4 years, the account earns 6%. During the next 4 years, the account earns 5%. During the last 2 years, the account earns 3%. Sarah invests 1000 for a period of 10 years in an account earning compound interest. Sarah’s interest rate is level for all 10 years. At the end of 10 years, Dan and Sarah have the same amount in their investment account. Determine the level annual interest rate earned by Sarah. 24. Jacob invests 1000 in an account earning simple interest of 4%. Cassie invests X in an account earning 2% compounded annually. In year Y, Cassie and Jacob earn the same annual effective interest rate. At the end of year Y, the amount of money in Cassie’s account is equal to the amount of money in Jacob’s account. Determine X. Answer: 19. a. 412.32 b. 8932.94 20. 7.7217% 21. 9.584 years 22. 11th year 23. 4.9942% 24. 1219.06...
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373chapter1section5 - compound interest During the first 4...

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