1. $10,000 was deposited into an investment account earning interest at a nominal rate of9% compounded monthly for eight years. How much interest was earned in the fifthyear?
2. You invest$1500 today and another$2000 18-months from today in a fund earning j₄=8% for the first 18 months followed by j₂=6% thereafter. How much do you have at the end of 4years?
3. A loan of$15,000 is taken out with interest at j₄=8% . What is the total amount of interest due on the loan in the secondyear?
4. You shop around for the best interest rate and have narrowed your choices to thefollowing:Bank I: j₁=12%Bank II: j₄=11.55%Bank III: j₁₂=11.30% You wish to have$S in 3 years. What is the present value ofS? Put the banks inorder, from lowest to highest present value of S.
5. What simple interestrate, r, is equivalent to j₁₂=9% over a2-year period?
6. You are investing a sum of money. Rank the following interest in order of which one will give you the most interest. a.j₂= 8.00% b.j₁₂=7.95% c.j₅₂=7.90%
7. You buy a motor boat worth$13,400. You can paycash, or chose one of two paymentoptions: Option1: Pay $10,000 in one year and$5000 in two years Option2: Pay $17,400 in 3 years If the interest rate on both options is j₁₂=9%, which one should you take and how much cheaper is it compared to payingcash?
8. A loan of$5000 is taken out today. It is due with interest at j₄=8% in 2 years. Instead, the borrower negotiates with the lender to pay$2500 in 1 year and$X in 3 years. If the lender can reinvest any payment at j₂=5%, what is the value ofX?
9. A woman borrowed money and owes$3000 one-year from now and$3000 three-years from now. The loan is renegotiated so that the woman can instead pay$X two-years from now and$4000 four-years from now which will fully pay back the loan. If the interest rate on the loan is j₂=8%, what is the value ofX?
10. Suppose you deposit$10,000 on March 21 in a fund earning simple interest at r= 13%. How much will you have exactly 6 monthslater?
11. You deposit$10,000 in a9-month investment that pays r= 8% for the first 6 months and r= 6% for the last 3 months. What is the maturity value of the investment at the end of 9months?
12. Jim lends$8000 to Sally on September23, 2006. Sally signs a promissorynote, with the note due in 10 months. The maturity value of the note is$8536.55. Jim sells the note to a bank on February23, 2007. If the bank wishes to earn r= 8%, what price does Jim get for thenote?
13. What is the price of a$100,000 182-dayT-bill if the yield rate is5%?
14. A person borrows$100,000 at a simple interest rate r= 24%. He is to repay the loan with 2payments, one at the end of 2 months and the other at the end of 6 months. The first payment is the same as the 2nd payment. Determine the size of thepayments, using the end of 6 months as the focal date.
15. A debt of$3000 is due in 4 months and another$5000 is due in 9 months. Instead, it is agreed that a payment of$X, made in 3months, followed by a payment of$4000 in 10months, will fully pay off the loan. Using 9 months as the focaldate, what is X if the simple interest rate on the loan is r= 10%?
16. A person owes$4000 ten(10) months from now. It is agreed that shecan, instead, pay$X now and another$2000 two years from now to replace the given debts. If simple interest is r=9% , what is X using 8 months as the focaldate?
17. A loan is to be paid by installments of$800 1-month fromnow, $6003-months fromnow, and$500 4-months from now. Instead of this paymentscheme, the borrower wishes to make one single payment 2 months from now. What is the amount of the alternative single payment using a focal date of 3 months and r= 6%?