6.1.1: Simple and Compound Interest (Exercises)
SECTION 6.1 PROBLEM SET: SIMPLE INTEREST AND DISCOUNT
Do the following simple interest problems.
| 1) If an amount of $2,000 is borrowed at a simple interest rate of 10% for 3 years, how much is the interest? | 2) You borrow $4,500 for six months at a simple interest rate of 8%. How much is the interest? |
| 3) John borrows $2400 for 3 years at 9% simple interest. How much will he owe at the end of 3 years? | 4) Jessica takes a loan of $800 for 4 months at 12% simple interest. How much does she owe at the end of the 4-month period? |
| 5) If an amount of $2,160, which includes a 10% simple interest for 2 years, is paid back, how much was borrowed 2 years earlier? | 6) Jamie just paid off a loan of $2,544, the principal and simple interest. If he took out the loan six months ago at 12% simple interest, what was the amount borrowed? |
| 7) Shanti charged $800 on her charge card and did not make a payment for six months. If there is a monthly charge of 1.5%, how much does she owe? | 8) A credit card company charges 18% interest on the unpaid balance. If you owed $2000 three months ago and have been delinquent since, how much do you owe? |
SECTION 6.1 PROBLEM SET: SIMPLE INTEREST AND DISCOUNT
Do the following simple interest problems.
| 9) An amount of $2000 is borrowed for 3 years. At the end of the three years, $2660 is paid back. What was the simple interest rate? | 10) Nancy borrowed $1,800 and paid back $1,920, four months later. What was the simple interest rate? |
| 11) Jose agrees to pay $2,000 in one year at an interest rate of 12%. The bank subtracts the discount of 12% of $2,000, and gives the rest to Jose. Find the amount of the discount and the proceeds to Jose. | 12) Tasha signs a note for a discounted loan agreeing to pay $1200 in 8 months at an 18% discount rate. Determine the amount of the discount and the proceeds to her. |
| 13) An amount of $8,000 is borrowed at a discount rate of 12%, find the proceeds if the length of the loan is 7 months. | 14) An amount of $4,000 is borrowed at a discount rate of 10%, find the proceeds if the length of the loan is 180 days. |
| 15) Derek needs $2400 new equipment for his shop. He can borrow this money at a discount rate of 14% for a year. Find the amount of the loan he should ask for so that his proceeds are $2400. | 16) Mary owes Jim $750, and wants to repay him. Mary decides to borrow the amount from her bank at a discount rate of 16%. If she borrows the money for 10 months, find the amount of the loan she should ask for so that her proceeds are $750? |
SECTION 6.1 PROBLEM SET: COMPOUND INTEREST
Do the following compound interest problems involving a lump-sum amount.
| 17) What will the final amount be in 4 years if $8,000 is invested at 9.2% compounded monthly.? |
18) How much should be invested at 10.3% for it
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19) Lydia's aunt Rose left her $5,000. Lydia spent $1,000 on her wardrobe and deposited the rest
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20) Thuy needs $1,850 in eight months for her college tuition. How much money should she deposit lump sum in an account paying 8.2% compounded monthly to achieve that goal? |
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21) Bank A pays 5% compounded daily, while
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22) EZ Photo Company needs five copying machines in 2 1/2 years for a total cost of $15,000. How much money should be deposited now to pay for these machines, if the interest rate is 8% compounded semiannually? |
| 23) Jon's grandfather planned to give him $12,000 in 10 years. Jon has convinced his grandfather to pay him $6,000 now, instead. If Jon invests this $6,000 at 7.5% compounded continuously, how much money will he have in 10 years? | 24) What will be the price of a $20,000 car in 5 years if the inflation rate is 6%? |
SECTION 6.1 PROBLEM SET: COMPOUND INTEREST
Do the following compound interest problems.
| 25) At an interest rate of 8% compounded continuously, how many years will it take to double your money? | 26) If an investment earns 10% compounded continuously, in how many years will it triple? |
| 27) The City Library ordered a new computer system costing $158,000; it will be delivered in 6 months, and the full amount will be due 30 days after delivery. How much must be deposited today into an account paying 7.5% compounded monthly to have $158,000 in 7 months? | 28) Mr. and Mrs. Tran is expecting a baby girl in a few days. They want to put away money for her college education now. How much money should they deposit in an account paying 10.2% so they will have $100,000 in 18 years to pay for their daughter's educational expenses? |
| 29) Find the effective interest rate for an account paying 7.2% compounded quarterly. | 30) If a bank pays 5.75% compounded monthly, what is the effective interest rate? |
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31) The population of the African nation of Cameroon was 12 million people in the year 2015; it has been growing at a rate of 2.5% per year. If the population continues to grows at a rate, what will the population be in 2030?
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32) According to the Law of 72, if an amount grows at an annual rate of 1%, then it doubles every seventy-two years. Suppose a bank pays 5% interest, how long will it take for you to double your money? How about at 15%? |