We deposited $7500 today.What will be the balance in 5 years @ 4% interest?What

Question

We deposited $7500 today.What will be the balance in 5 years @ 4% interest?What is the total interest earned?

What is year 1 interest only?

What is year 2 interest only?

What is year 3 interest only?

          What is year 4 interest only?

          What is year 5 interest only?

         Does the total of each individual year’s interest all combined

         Equal the total interest you got above? It should.

We made 10 annual deposits of $3000 each on December 31.What will be the balance at 5% interest?What is the total interest earned?

How much should be deposited today to have $90,000 in 20 years at 7% interest?What is the total interest earned?

How much should be deposited today so that we can withdraw $40,000 every year on December 31 for 10 years at 8%?What is the total interest earned?

5. We deposited $1500 today. What will be the balance in 2 years at 24% interest compounded monthly?

What will be the balance if compounded quarterly?

This proves that more frequent compounding yields a (choose one)

larger/smaller/same amount of interest.

6. You borrow money to buy a house, and your annual payments are $24,000 for 15 years. Assuming a 6% interest rate, what was the home’s purchase price?   How much are you actually paying for the house, including interest? How much is the bank making off of you (interest)?

Explanation / Answer

7500×future value factor

7500×1.217

9127.5

Interest =1627.5

300

312

324.48

337.45

351

Yes total interest is combined

3000×12.578=37734

Total interest =7734

90000×0.258=23220

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