Question

SIMPLE INTEREST:

1. How much is the amount and simple accumulated interest of $ 16,750, to 10.75% for five years and seven months?

2. Find the difference between exact simple interest and ordinary simple interest when calculating $ 35,600 to 77 7/8% for 180 days?

3. If you deposited $ 31,740 at what%, would you accumulate an amount of $ 61,000 in seven years?

II. COMPOUND INTEREST:

1. Find the amount and compound interest from $ 21,760 to 71⁄4% for the space of 25 years calculated:

to. annually
b. semiannually c. quarterly basis d. monthly
and. continually

III. PRESENT VALUE:

1. Find the net present value of an inheritance of $ 750,000 discounted today at 4,625% for 15 years.

2. What is the Present Value of a LOTO prize of $ 12 million to be received within 20 years and discounted today at 4,675%. What would you prefer, $ 50,000 every year for 20 years or the VP? Explain

IV. ANNUITIES:

1. If you decide to open an IRA of $ 3,500 per year, which offers 4 1⁄2% annual interest for 30 years. How much will be the amount and interest accumulated?

V. PRESENT VALUE OF AN ANNUALITY:

1. What is the present value of $ 150,000 of a LOTO prize? ordinary annual for 20 years at a discount rate of:

to. 5% per year b. 10% per year c. 20% per year

Answer 1

SIMPLE INTEREST

1.

Simple Interest = 16,750 * 10.75% * (5 + 7/12) = $ 10,053

Amount = Principal + SI = $ 26,803

3. Interest Amount = 61,000 - 31,740 = 29,260

Rate% = 29260/7 * 1/31740 = 13.17%

COMPOUND INTEREST

When compounded annually, Amount = 21,760*(1+17.75%)^25 = 1,293,248. Interest = 1,271,488

When compounded semi-annually, Amount = 21,760* (1+17.75%/2)^(25*2) = 1,527,803. Interest = 1,506,043

When compounded quarterly, Amount = 21760 * (1+17.75%/4)^(25*4) = 1,672,267. Interest = 1,650,507

When compounded monthly, Amount = 21760 * (1+17.75%/12)^(25*12) = 1,781,257. Interest = 1,759,497

When compounded continuously, Amount = 21760*e^(17.75%*25) = 1,840,096.7. Interest = 1,818,336

PRESENT VALUE

750,000/(1+4.625%)^15 = 380,653.