Reference no: EM133027782
Questions -
Q1. Red Company invested $10,000 in a fund that was earning interest at a rate of 2.00% compounded semi-annually. After 2 years and 6 months, the company transferred these funds to another investment that was earning interest at 2.50% compounded monthly.
a. What is the balance in the fund at the end of 2 years and 6 months?
b. What is the balance in the fund at the end of 6 years (from the initial investment)?
c. By what amount did the fund grow during the 6 year period?
Q2. Reuben has the option of receiving a loan of $13,250 for 6 years at an interest rate of either 4.01% compounded monthly or 4.01% compounded semi-annually.
a. What would be the accumulated value of the loan at the end of the term, if it was received at the interest rate of 4.01% compounded monthly?
b. What would be the accumulated value of the loan at the end of the term, if it was received at the interest rate of 4.01% compounded semi-annually?
c. How much more interest would Reuben have to pay if he chose the monthly compounding interest rate intead of the semi-annually compounding rate?
Q3. Brooke deposited $25,000 in an investment fund that was growing at a rate of 5.50% compounded quarterly, for a period of 6 years and 6 months.
a. What is the accumulated value of the investment at the end of 6 years and 6 months?
b. What is the amount of interest earned from this investment?
Q4. A company currently owes $25,000 to a bank for a loan it took 5 years and 10 months ago. The interest rate charged on the loan was 5.75% compounded monthly.
a. What was the original principal of the loan?
b. What was the amount of interest charged on the loan?
Q5. The maturity value of a savings account that belonged to Peach Company was $48,333.50. The interest charged for the first 5 years was 5% compounded semi-annually, and 5% compounded quarterly for the next 2 years.
a. Calculate the amount that was deposited in the savings account at the beginning of the period.
b. Calculate the total amount of interest earned from this investment.
Q6. If you want to have $10,500.00 in 2 years and 9 months, how much should you deposit today in an investment fund that is earning interest at a rate of 4.28% compounded quarterly?
Q7. Amy received a loan of $45,750, 7 years ago. The interest rate charged on the loan was 4.80% compounded quarterly for the first 6 months, 5.43% compounded semi-annually for the next 3 years, and 5.64% compounded monthly thereafter.
a. Calculate the accumulated value of the loan at the end of the first 6 months.
b. Calculate the accumulated value of the loan at the end of the next 3 year period.
c. Calculate the accumulated value of the loan today.
d. Calculate the amount of interest charged on this loan over the past 7 years.
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