Compound Interest problems
- 1. How much money would you need to deposit today at 9% annual interest compounded monthly to have $12000 in the account after 6 years?
Options- A. 9007
- B. 4007
- C. 7007.08
- D. 8oo7 Discuss
Correct Answer: 7007.08
Explanation:
FV=P(1+r/n)^nt
- 2. You deposit $300 in a savings account that pays 4% simple annual interest. Find your account balance after 9 months.
Options- A. 309
- B. 409
- C. 609
- D. 509 Discuss
Correct Answer: 309
Explanation:
A = P + Prt
- 3. Simon deposits $400 in an account that pays 3% interest compounded annually. What is the balance of Simon?s account at the end of 2 years?
Options- A. 424.36
- B. 524.56
- C. 545.36
- D. 456.36 Discuss
Correct Answer: 424.36
Explanation:
I=Prt
I=12
Balance = P +Prt
412
Find the balance at the end of the second year.
I = Prt=12.36
Balance =P + Prt
424.36
- 4. Jackie deposits $325 in an account that pays 4.1% interest compounded annually. How much money will Jackie have in her account after 3 years?
Options- A. 346.64
- B. 356.64
- C. 366.64
- D. 376.64 Discuss
Correct Answer: 366.64
Explanation:
A=P(1+r)^t
- 5. Find the annual interest rate that produces $100,000 from $20,000 in 15 years.
Options- A. 9.33%
- B. 10.33%
- C. 11.33%
- D. 12.33% Discuss
Correct Answer: 11.33%
Explanation:
l=(F/P)^1/n-1
- 6. Calculate the effective interest rate compounded quarterly of a 13% annual rate.
Options- A. 13.65%
- B. 14.665%
- C. 15.65%
- D. 16.65% Discuss
Correct Answer: 13.65%
Explanation:
E=(1+i/n)^n-1
- 7. Calculate the effective interest rate of a 10% annual rate compounded continuously.
Options- A. 9.52%
- B. 10.52%
- C. 11.52%
- D. 12.52% Discuss
Correct Answer: 10.52%
Explanation:
E=e^i-1
- 8. An amount of 5,000 is invested at a fixed rate of 8 per cent per annum. What amount will be the value of the investment in five years time, if the interest is compounded annually
Options- A. 7346.64
- B. 8346
- C. 3456
- D. 4567 Discuss
Correct Answer: 7346.64
Explanation:
The only part of this type of calculation that needs particular
care is that concerning the interest rate. The formula assumes that
r is a proportion, and so, in this case:
r = 0.08
In addition, we have P = 5,000 and n = 5, so:
V = P(1 + r)5 = 5,000 x (1 + 0.08)5 = 5,000 x 1.469328 = 7,346.64
Thus the value of the investment will be 7,346.64
- 9. Give an investment of $13200,compound amount of $22680.06 invested for 8 years,what is the interest rate if interest rate is compounded anually?
Options- A. 6%
- B. 5%
- C. 7%
- D. 8% Discuss
Correct Answer: 7%
Explanation:
M = p(1+i)^n
- 10. Example:Given an amount needed(future value) of $3300 in 4 years at an interest rate of 11% compounded anually,Find the present value and the amount of interest earned
Options- A. 1126.19
- B. 1237
- C. 2863
- D. 1892 Discuss
Correct Answer: 1126.19
Explanation:
M=P(1+i)^n
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