Question

Suppose on January 1 you deposit $1000 in an account that pays a nominal, or quoted,...

  1. Suppose on January 1 you deposit $1000 in an account that pays a nominal, or quoted, interest rate of 12%, with interest added (compounded) daily. How much will you have in your account on October 1, or 9 months later?
  2. You want to buy a car, and a local bank will lend you $10,000. The loan would be fully amortized over 6 years (72 months), and the nominal interest rate would be 10%, with interest paid monthly. What is the monthly loan payment?
  3. While Mary Corens was a student at the University of Tennessee, she borrowed $20,000 in student loans at an annual interest rate of 5%. If Mary repays $200 per year, then how long (to the nearest year) will it take her to repay the loan?
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Answer #1

1)

No. of days from Jan 1 to Oct 1 =31+28+31+30+31+30+31+31+30

=273 days

Hence the amount in account is $1093.89

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