Exam 21: Savings Models

Suppose you invest in an account that pays 6% interest, compounded quarterly. You would like your investment to grow to $8000 in 14 years. How much would you have to invest in order for this to happen?

What is the APY for 10.2% compounded quarterly?

Use the geometric series formula to find the sum of 1 - q + q² - q³ + q⁴.

What is the APY for 6% compounded weekly?

A man borrowed $9000 for four years under simple interest. At the end of the four years his balance due was $11,160. What annual simple interest rate did he pay?

Suppose that you have $2000 on deposit at your bank at an annual rate of 2.34%. If the bank compounds continuously, what is the balance of your account after two years?

Michelle invests in a savings account that pays 4% interest compounded monthly. What is the APY for this account?

In late 2001, the inflation rate was about 2.9%. If you invested in a savings account with an annual interest rate of 7.5%, what was the real growth rate of this investment?

Use the geometric series formula to find the sum of 1 – 2 + 4 – 8 + 16.

Bonnie invested in her employer's stock program in 1981. The annual yield for her investment was 7.5%, but the inflation rate was 9.8%. What was the real growth rate of this investment?

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct. -In 1999, Rachel had the opportunity to either invest $100,000 for three years in the housing market or in a CD paying 3.5%. If the 1999 CPI is 166.6 and the 2002 CPI is 179.9, which is the better investment?

In Questions make the assumption that the change in housing prices exactly matches the change in the CPI. In fact, housing is only part of the CPI, and figures into the CPI through rents rather than sale prices, so this assumption may be far from correct. -In 1999, Debra had the opportunity to either invest $100,000 for three years in the housing market or in a CD paying 2.5%. If the 1999 CPI is 166.6 and the 2002 CPI is 179.9, which is the better investment?

A computer was purchased in 1999 for $3000. Its value in current dollars depreciates steadily at a rate of 25% per year. What will the computer's value be at the beginning of 2003?

In 2010, you make an investment that will grow to $50,000 in 2020. The CPI in 2010 is 218.1 and you guess that the CPI in 2020 will be 270.0. In 2020, approximately how much will your investment be worth in 2010 dollars?

If the rate of a 24-month CD is 1.15% compounded daily, how much would need to be set aside in such a CD to have $25,000 at the end of 24-month term?

Stephen made an investment with a 9% annual yield. However, the real growth rate of his investment was only 4%. What was the inflation rate?

Javier bought a house in 1974 for $49,000 and sold it in 2014. If the 1974 CPI is 49.3 and the 1997 CPI is 160.5, how much would the house be worth in 2014 dollars?

Moira invests in a savings account that pays 6% interest compounded weekly. What is the APY for this account?

The Chavez family has decided to save up for a new spa. They want to save $10,000 in five years. They find a savings account for which interest was compounded monthly at 8.2%. How much will they have to deposit each month to meet this goal?

Zoe invests in a savings account that pays 7% interest compounded quarterly. What is the APY for this account?