Deck 16: Compound Interest

Question 1

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.
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Answer 1

Question 2

Compute the future value for each of the following problems. Use Tables 16-1A&B or a calculator.
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Answer 2

Question 3

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.

Answer 3

Question 4

Keifer Air Conditioning can borrow money for 2 years at 12% compounded quarterly. Compute the interest charge if Keifer borrows $28,000 to remodel its office. (Use Tables 16-1A&B or a calculator.)​

Question 5

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.

Question 6

Carol Chin received $5,400 as an annual profit-sharing bonus from her employer. Her accountant recommended an investment that would give her a return of 9% compounded annually. Compute the value of Carol's investment after 7 years. (Use Tables 16-1A&B or a calculator.)​

Question 7

Compute the future value for each of the following problems. Use Tables
16-1A&B or a calculator.
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Question 8

Marie Chaney borrowed $12,580 from her mother for 4 years at 5% compounded annually. How much interest will Marie have to pay to her mother? (Use Tables 16-1A&B or a calculator.)​

Question 9

Norah Jacob deposited $6,500 in a credit union, which pays an interest of 6% compounded quarterly. Compute the amount that Norah will have in her account after 4 years. (Use Tables 16-1A&B or a calculator.)​

Question 10

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.

Question 11

Compute the future value for each of the following problems. Use Tables 16-1A&B or a calculator.
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Question 12

Compute the future value for each of the following problems. Use Tables 16-1A&B or a calculator.
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Question 13

When his daughter Sarah was born, Will Kravitz deposited $5,000 into an account that guaranteed to pay 8% compounded quarterly. Compute the amount that will be in the account 6 years later when Sarah starts school. (Use Tables 16-1A&B or a calculator.)​

Question 14

Deborah Erickson deposited $8,875 in a credit union, which pays an interest of 8% compounded quarterly. Compute the amount that Deborah will have in her account after 3 years. (Use Tables 16-1A&B or a calculator.)​

Question 15

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.
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Question 16

University Lending Corp. loans money to students at 10% compounded semiannually. Dwight Burch borrows $5,000 for 4 1/2 years. Compute the total amount, both principal and interest, that Dwight will be required to repay. (Use Tables 16-1A&B or a calculator.)​

Question 17

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.
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Question 18

Compute the future value and the compound interest earned for each of the following investments. Use Tables 16-1A&B or a calculator.
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Question 19

Tracy Roberts loaned $3,600 to her sister Felicity, who just had a baby. Tracy charged Felicity interest at 6% compounded semiannually. Compute total payment that Tracy will receive from her sister if the loan is for 3 years. (Use Tables 16-1A&B or a calculator.)​

Question 20

Compute the future value for each of the following problems. Use Tables 16-1A&B or a calculator.​
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Question 21

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 22

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 23

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 24

Compute the present value in each of the following problems. Use Tables 16-1A&B or 16-2A&B or a calculator.
a.How much must you deposit today into an account that pays 12% compounded quarterly to have $9,000 in 3 years?
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b.How much must you lend today at 8% compounded semiannually to be repaid a total (principal and interest) of $23,400 in 8 years?

Question 25

Amanda Nelson wants to buy a new car 3 years from now. In addition to trading in her current car, she estimates that she will need an additional $8,000. Compute the amount that Amanda must invest now if she can earn 5% compounded quarterly. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 26

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 27

Joseph Patrik will deposit enough money today so that his account will contain $30,000 in 15 years. The account will pay interest at 12% compounded semiannually. Compute the interest (in dollars) that Patrik will earn during the 15 years. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 28

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.
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Question 29

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.
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Question 30

Winchell Plastics plans to buy a new delivery truck. The company can borrow $16,000 for 15 months at 15% compounded monthly. If Winchell borrows the money at this rate, how much will it have to pay in interest? (Use Tables 16-1A&B or a calculator.)​

Question 31

Beverly Forest is a single parent with twin daughters who are now seniors in high school. Beverly inherited money from her father's estate and decided that it would be reasonable to save $50,000 of the inheritance for wedding expenses in the event that both daughters should decide to get married in the same year. How much money will Beverly have in 4 years if she can invest the $50,000 and get a return of 8% compounded quarterly? (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 32

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 33

Harold Lau will deposit enough money today so that his account will contain $20,000 in 10 years. The account will pay interest at 8% compounded semiannually. Compute the interest (in dollars) that Harold will earn during the 10 years. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 34

Compute the present value in each of the following problems. Use Tables 16-1A&B or 16-2A&B or a calculator.
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a.Compute the amount that you must lend today at 10% compounded semiannually to be repaid a total (principal and interest) of $10,000 in 13 years.​
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b.Compute the amount that you must invest today at 12% compounded annually to have $1,500 in 3 years.

Question 35

James Parker wants to buy a new motorcycle 4 years from now. In addition to trading in his current motorcycle, he estimates that he will need an additional $2,000. Compute the amount that James must invest now if he has to earn 12% compounded quarterly. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 36

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 37

Compute the present value (principal) and the compound interest earned for each of the following investments. Use Tables 16-1A&B or 16-2A&B or a calculator.​
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Question 38

Two-and-one-half years from now, Melanie Olson wants to have $8,500 in the bank. She can earn interest of 12% compounded monthly. Compute the amount that Melanie must deposit today. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 39

Compute the present value in each of the following problems. Use Tables 16-1A&B or 16-2A&B or a calculator.
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a.How much must you invest today at 12% compounded monthly to have $10,000 in 2 years?
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b.Compute the amount that you must deposit today into an account that pays 5% compounded quarterly to have $15,000 in 5 years.

Question 40

Newton Kress plans to give his son $12,500 when his son turns 21, which will be 5 years from now. If Newton finds an investment that will pay 8% compounded semiannually, compute the amount that he must invest today to achieve his goal. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 41

In January, Dana Blakely decided to donate $2,500 to the Riverfront Humane Society. For income tax purposes, she will not make the donation until next December. If Dana can earn 12% compounded monthly, how much must she invest in January to have $2,500 in 11 months? (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 42

Maria Gomez, an attorney, plans to replace all of her office furniture in 5 years. She estimates that the cost will be $17,000 at that time. Compute the amount that Maria should deposit today at 6% compounded annually to have the money available. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​

Question 43

When she got married, Lannie Ferguson left all of her personal savings in her own credit union account, which was paying 6% compounded quarterly. Six years later, the same account had increased to $26,871.62. Compute the amount that was in the account when Lannie got married. She made no additional deposits into the account. (Use Tables 16-1A&B or 16-2A&B or a calculator.)​