(a) How much would a $10,000 4-year Certificate of Deposit at 6% compounded monthly be worth at the end of 4 years? (b) How much more is this than the same at simple interest? Use tables in the Business Math Handbook.
Alice Horn, owner of Horn's Ceramics Shop, loaned $12,000 to Pete Hall to help him open a deli. Pete plans to repay Alice at the end of 5 years with 8% interest compounded semiannually. How much will Alice receive at the end of 5 years?
Carol Mores loaned Jeff Sales $12,000 to open up a coffee shop. After 5 years, Jeff will repay Carol with 12% interest compounded quarterly. How much will Carol receive at the end of 5 years?
Today, Harvard University may cost $120,000 for 4 years, but 20 years from now it may cost $385,000. How much should you put away today to send your child to Harvard in 20 years if Bank A is compounding interest annually at 6% and Bank B is compounding interest semiannually at 5%? Use tables in the Business Math Handbook.
Kyle Wong loans $12,000 to his brother-in-law. He will be repaid at the end of 9 years with interest at 8% compounded semiannually. Find out how much will be repaid.
A retired engineering professor at California State Polytechnic, has a nest egg of $92,000. He decides to put his money in his local bank, which compounds interest quarterly at an interest rate of 4%. (a) How much will Robert have in 10 years? (b) How much interest will he have earned? Use tables in the Business Math Handbook.
A savings account in the Emigrant Savings Bank in New York now earns 2.25% simple interest a year. Bank One pays 6% interest compounded semiannually on a certificate of deposit. Robert Wier wants to deposit $1,500 in his savings account, how much additional interest will he earn by placing the money in a certificate of deposit?
Jean Rich, owner of a local Dunkin' Donuts shop, loaned $14,000 to Mel Lyon to help him open an Internet business. Mel plans to repay Jean at the end of 6 years with 6% interest compounded semiannually. How much will Jean receive at the end of 6 years?
Jim Fortunate received a large settlement of $200,000. When Jim retires in 25 years, he would like to have at least $80,000 yearly income for 10 years. A local bank pays 6% interest compounded semiannually on a certificate of deposit. (a) How much of the settlement must Jim place in the bank to meet his retirement goal? (b) What amount would he receive if he invested the entire $200,000 in the bank?
A child entering college 11 years from now can expect to pay more than $20,000 a year to attend a public institution and almost $60,000 a year for an Ivy League school. Assume you are planning your child's education and have received an inheritance that will cover the child's costs. You place the inheritance in a bank paying 6% interest compounded quarterly. (a) How much money should you put away to send your child to a public institution for 4 years? (b) How much money should you put away to send your child to a private institution? Use the Business Math Handbook.
