MBF 3C1 Lesson 8 Assignment In this assignment you are going to explore the characteristics of simple interest. Total marks: 26 marks Part A: Finding the Answer: Answer the questions in the space provided. Show your work, including formulas, to ensure full marks. Make sure you round appropriately. Marks allotted for each question are written in the question. 1. (1 mark) This graph shows the growth of an investment. Investment Growth $3.200.00 - $3,100.00 $3.000 99 $2.900.00 Amount 2.500 .09 1,700.00 $2.600.00 + $2,500.00 + 40000 + 0.0 05 10 15 10 25 30 315 40 45 50 Years What is the initial value of the investment? a. $2000 b. $2400 c. $2500 d. $3000 2. (3 marks) Kyle wants to save for a new motorcycle. He deposits $2500 in a special savings account earning 6.25% simple interest per year. How much money will he have at the end of three years? a. $2998.66 b. $2968.75 c. $3011.21 d. $3014.11 Page 1 3. (2 marks) A bank is offering a special three-year investment paying 3.25% per year. How much simple interest would you earn by the end of the three years if you deposited $1500 in the account? a. $146.25 b. $151.05 c. 8152.97 d. $153.40 4. (2 marks) You have decided to buy a new TV. To do so, you must borrow money to pay $1500 of the purchase price. Your parents will lend you the money and charge you a rate of 18.5% per year. How much interest will you have to pay when you pay off the loan in one year, if the interest is simple interest? a. $277.50 b. $290.33 c. $302.28 d. $665.48 5. (2 marks) You have to maintain a minimum balance of $750 in your savings account. The simple interest rate earned on your savings is 3.75% per year. What is the amount of interest you earn over a two-year period? a. $28.61 b. $57.30 c. $56.25 d. $5832 Page 2 6. (2 marks) You deposited $5000 in an investment fund that pays 4.5% per year. How much simple interest will you earn over a period of five years? a. $225.00 b. $228.83 c. $1246.02 d. $1125.00 7. (2 marks) A $2600 investment is made for a three-year period at a simple interest rate of 6.5% per year. How much interest will be earned over the term? a. $169.00 b. $348.99 c. $507.00 d. $540.67 8. (3 marks) To pay for a trip to visit his grandparents, Edward borrowed $1200 at a simple interest rate of 6.25% per year. How much must he repay if he pays the loan off at the end of one year? a. $1257.13 b. $1275.00 c. $1358.46 d. $1445.38 Page 3 9. (3 marks) Roberta has inherited $15 000 and would like to invest the money to pay for a new car in two years. If she invests the money at a simple interest rate of 5.9% per year, how much will she have for the purchase? a. $16770.00 b. $16822.22 c. $16849.87 d. $16864.12 10. (3 marks) Danielle's parents have put away $12 000 to pay for her university education. The money is invested in an RESP that pays 6.7% per year. How much will she have for university in four years, if the account pays simple interest? a. $15216.00 b. $15676.48 c. $16596.00 d. $16759.66 11. (3 marks) David has $9 650 put into a special investment fund that has paid, on average, 13.2% per year over the last 10 years. At this rate, how much money would David have if he left the money in the fund for 6 years, and the interest is simple interest? a. $17292.80 b. $20778.48 c. $33341.99 d. $34647.46 Page 4