Question

Suppose that you invested $4,000 in a CD on January 1, 2015 maturing in 5 years that pays interest of 3% per year compounded monthly and credited at the end of each month. You don't withdraw any money from the CD during its term.

(a) How much money was in the CD account on February 1, 2015?

(b) How much money was in the CD account on March 1, 2015?

c) How much money will be in the CD account on January 1, 2020

d) What is the total amount of interest paid on the CD during these 5 years?

e) What is the effective annual rate of interest on this CD? Your answer should be accurate to four significant figures, and expressed as a percentage.

(f) After how many months will the amount of money in the CD
account first be $4,400 or greater?

This means that if you think the money in the CD account will first
be $4,400 or greater on March 1, 2015, you should type

2

Answer #1

Suppose you invested $5,000 in a CD on January 1, 2015 maturing
in 20 years that pays interest of 4% per year compounded
semiannually and credited at the end of each six month period. You
don't withdraw any money from the CD during its term.
(a) How much money was in the CD account on July 1, 2015?
b) How much money was in the CD account on January 1, 2016?
(c) How much money will be in the CD...

Suppose you invested $5,000 in a CD on January 1, 2015 maturing
in 20 years that pays interest of 4% per year compounded
semiannually and credited at the end of each six month period. You
don't withdraw any money from the CD during its term.
(a) How much money was in the CD account on July 1, 2015?
(b) How much money was in the CD account on January 1, 2016?
(c) How much money will be in the CD...

10. Suppose you invested $2,000 in a CD on January 1, 2016
maturing 5 years that pays interest of 4% per year compounded
monthly and credited at the end of each month. You don't withdraw
any money for the CD during the term.
(a.) How much money will be in the CD account on January 1,
2021?
(b.) What is the effective annual rate of interest on this
CD?

3. Suppose you invest $20,000 in a CD on January 1, 2020
maturing in 14 years that pays interest of 5% per year compounded
semiannually (meaning every six months) and credited at the end of
each six month period. You don't withdraw any money from the CD
during the term.
(a) How much money is in the CD account on July 1,
2020?
(b) How much money is in the CD account on January 1,
2021?
(c) How much money...

Suppose you were hired on January 1, 2010 and started depositing
$200 at the end of each month, with the first deposit on January
31, 2010, in a pension fund that pays interest of 9% per year
compounded monthly on the minimum monthly balance and credited at
the end of each month.
(a) How much money was in the pension fund on February 1,
2010?
(b) How much money was in the pension fund on March 1, 2010?
(c) How...

Suppose you borrowed $200,000 for a home mortgage on January 1,
2015 with an annual interest rate of 6% per year. The balance on
the mortgage is amortized over 30 years with equal monthly payments
at the end of each month. (This means the unpaid balance on January
1, 2045 should be $0).
(a) What are the monthly payments?
(b) How much interest was paid during the 30 years of the
mortgage?
(c) What is the unpaid balance on the...

Assume that you have $3000 to invest for 5 years. You could
purchase a 5-year CD with a guaranteed interest rate of 2.52%
compounded monthly. On the other hand, if you are willing to face
the risk of actually losing your money, you could invest it in the
stock market which has an historical return rate of about 6.5% per
year. Think of this as investing your money in a
non-guaranteed account that pays 6.5% APR compounded
annually.
With the...

Sutton Pointers Corporation expects to begin operations on
January 1, 2015; it will operate as a specialty sales company that
sells laser pointers over the Internet. Sutton expects sales in
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in February and March. All sales are on account. Sutton expects to
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second month...

You want to invest all your graduation gift money in a 5-yr CD
that will generate 6.0% interest. You tallied up the gifts and have
$9,000 to invest today! When you graduate from college in 5 years,
you plan on taking a European cruise. You plan to withdraw $4,000
to cover expected costs of this cruise. You will then re-invest the
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Suppose you plan to save $8,000 per year for the 40 years you
are working. In addition to the amount you are saving each year,
you expect to sell your house for $500,000 in year 35 and deposit
this money into your account. How much can you withdraw in equal
amounts each year for the 35 years you are retired. The interest
rate you will earn during the 40 years you are saving is 8%. Once
you retire, you’ll reduce...

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