Knowledge/Understanding 1121 1. Substitute the values into the formula A = P(1 + D"and evaluate: a $600 investment at 7% per year, compounded quarterly, for three years. Show your work. [3] A- 2. Substitute the values into the formula A = P(1 + rt) and evaluate: a $700 investment at 4% per year, simple interest, for five years. Show your work. [3] A 3. Show the growth of a $2000 investment, both at 5% per year simple interest and 5% per year, compounded annually. Both occur for three years. Show your work. [4] Simple Interest: Compound Interest: The amount of interest paid on this investment is [1] The amount of interest paid on this investment is [1] Communication 161 4. Identify what kind of interest each graph represents (Simple vs. Compound Interest). [2] 2 -2-10 5. What are two aspects you should consider when considering the best credit card for your situation? [2] 6. Give an example when you want the least amount of interest as possible, and an example when you would want the most amount of interest as possible. [2] APPLICATION. 121 7. The graph shows the growth of a $2000 investment at 6% per year, compounded annually 2. How much is the investment worth after five years? [U 3500 3000 Snowy 2500 2000 0 10 b. Estimate the time it would take for the investment to double in value [0] Year c. How would the graph change if the interest rate were 4% per year, compounded annually? Justify your answer and predict your sketch on the graph provided. [2] 2 S. Jeeva is 10 years old. His parents have decided to invest in some money for his education, so that he will have $15000 at age 18 when he goes to college. If the investment can cam 6.6% per year, compounded monthly, how much will his parents need to invest? [4] 9. A four-year lease of a hybrid car requires a $4500 down payment and monthly payments of $399. a. Determine the total cost of the lease. [21 b. Calculate the average cost per month over the life of the lease. [2] urs (10) You need to borrow $2000. Which lean should you take? OPTION A: S2000 for three years at 10% per year, compounded monthly OPTION B: S2000 for three years at 9.2% per year, compounded quarterly Justify your response. [5] Option : Option : So which loan would you take? 00) 2. Steve borrowed some money at 99 per year, compounded semi-annually. After three years, he paid $2604.52 to pay off the loan a Whut sum of money did Steve borrow?D] b. How much interest did he end up paying in order to get the loan