Exam 9: Compound Interest: Further Topics and Applications

A $4,000 loan at 4.8% compounded monthly was settled by a single payment of $5,000 including accrued interest. Rounded to the nearest day, how long after the initial loan was the $5,000 payment made? For the purpose of determining the number of days in a partial month, assume that a full month has 30 days.

Does the combined effect of a 20% increase followed by a 20% decrease differ from the combined effect of a 20% decrease followed by a 20% increase? Justify your answer.

A number of years ago, your client invested $6,000 at a rate of return of 9% compounded annually. If the investment is currently worth $10,968.25, for how long has she held the investment?

Calculate the missing interest rate (to the nearest 0.01%)

To be equivalent to 10% compounded semiannually, what must be the nominal rate with: a. annual compounding? b. quarterly compounding? c. monthly compounding?

Anita contributes a lump sum of $50,000 and $350 per month in an investment earning 5.5% compounded monthly over a 10 year period. At the end of the 10th year, Anita plans to transfer her investment into another account where she can withdraw $4,000 per quarter for 10 years and still have $10,000 remaining. Based on quarterly compounding, determine what the rate of interest that will achieve this goal.

To be equivalent to 7% compounded quarterly, what must be the nominal rate with: a. annual compounding? b. semiannual compounding? c. monthly compounding?

What is meant by a "capital loss"?

Calculate nominal rate of interest (to the nearest 0.01%):

Advances in technology have improved the rate of production of widgets over the last 10 years and the number of plant workers required has declined by 25%. What is the equivalent annual rate of decrease during the period?

To be equivalent to 5.5% compounded annually, what must be the nominal rate with: a. semiannual compounding? b. quarterly compounding? c. monthly compounding?

For an investment to triple in value during a 15-year period. a) What annually compounded rate of return must it earn? b) What quarterly compounded rate of return must it earn? c) What monthly compounded rate of return must it earn?

Last year, the Muirs purchased a rental condo in Woodbridge for $300,000. During the year, they paid $4,000 for property taxes and $2400 for repairs, and collected $1850 per month in rent. The home has increased in value to $335,000. Calculate the following: a) Income yield. b) Capital gain yield. c) Rate of total return. d) Total return.

An investment of $10,000 on January 1, 1970 grew to $300,000 on January 1, 2010. What average annually compounded rate of return was earned?

The Consumer Price Index (based on a value of 100 in 1992) rose from 93.3 in 1990 to 113.5 in 2000. What was the (equivalent) annual rate of inflation in the decade of the 1990s?

If the population of Dodge City is decreasing at a rate of 19% per year, how long will it take to decrease from 7,700 to 2,000?

Calculate the term of the loan or investment:

What rate of return in the second year of an investment is required to break even after a rate of return of -20% in the first year?

A $45,000 payment on August 11^th was not paid. Instead $46,306.41 was paid earning 8.8% interest compounded quarterly. The payment was made on Dec 20.

Calculate the missing interest rate (to the nearest 0.01%)