University:
California State University, Northridge
Course:
MATH 103 | Mathematical Methods for Business
Academic year:

2010
Views:

187

Pages:

1
Author:

Micah Clayton

Math 103 Simple and Compound Interest Practice Problems with answers 1. If $3,000 is loaned for 4 months at a 4.5% annual rate, how much interest is earned? $45 2. A loan of $4,000 was repaid at the end of 10 months with a check for $4,270. What annual rate of interest was charged? 8.1% 3. A newborn child receives a $20,000 gift toward a college education from her grandparents. How much will the $20,000 be worth in 17 years if it is invested at 7% compounded quarterly? $65, 068.44 4. What will a $210,000 house cost 10 years from now if the inflation rate over that period averages %3 compounded annually? $282, 222.44 5. Which is a better investment: 9% compounded monthly or 9.3% compounded annually? 9% monthly 6. If an investment company pays 6% compounded semiannually, how much should you deposit now to have $10,000 5 years from now? $7, 440.94 7. If an investment company pays 9% compounded continuously, how much should you deposit now to have $25,000 9 years from now? $11, 121.45 8. How long will it take $4,000 to grow to $9,000 if it is invested at 7% compounded monthly? 11.62 years, or 11 years and 8 months 9. How long will it take $6,000 to grow to $8,600 if it is invested at 9.6% compounded continuously? 3.75 years 10. How long will it take money to double if it is invested at (a) 10% compounded quarterly? 7.02 years, which rounds up to 7 years and 3 months (1 quarter) (b) 10% compounded continuously? 6.93 years