Thayer Farm trust made a farmer a loan of $1, 200 at 16% for three years compounded annually. Find the future value and the compound interest paid on the loan. Compare the compound interest with simple interest for the same period.

2. Maeola invests $3,800 at 2% compounded semiannually for two years. What is the future value of the investment, and how much interest will she earn over a two-year period.

4. Margaret invested $5,000 at 1.8% compounded quarterly for one year. Find the future value and the interest earned for the year.

6. A loan of $18,500 at 6% compounded quarterly for four years. Find the future value and compound interest.

8. A loan of $500 at 5% compounded semiannually for five years. Find the future value and compound interest.

12. A loan of $8,000 for two acre of woodland is compounded quarterly at an annual rate of 6% for five years. Find the compound amount and the compound interest.

14. Find the future value of an investment of $10,500 if it is invested for four years and compounded semiannually at an annual rate of 2%.

16. You have $8,000 that you plan to invest in a compound-interest-bearing instrument. Your investment agent advises you that you can invest the $8,000 at 8% compounded quarterly for three years or you can invest the $8,000 at 8 1/4% compounded annually for three years, Which investment should you choose to receive the most interest?

17. Find the effective interest rate for the first year for a loan for four years compounded semiannually at an annual rate of 2%.

19. Ross Land has a loan of $8,500 compounded quarterly for four years at 6%. What is the effective interest rate for the first year for the loan?

20. What is the effective interest rate for the first year for a loan of $20,000 for three years if the interest is compounded quarterly at a rate of 12%?

22. How much compound interest is earned on a deposit of $1,500 at 0.5% compounded daily for 30 days?

24. What is the compound interest on $8,000 invested at 1.25% for 180 days if it is compounded daily?

13.2

1. Compute the amount of money to be set aside today to ensure a future value of $2,500 in one year if the interest rate is 2.5% annually, compounded annually.

2. How much should Linda set aside now to buy equipment that costs $8,500 in one year? The current interest rate is 0.95% annually, compounded annually.

10. Calculate the amount of money that must be invested now at 4% annually, compounded quarterly, to obtain $1,500 in 3 years.

11. Dewey plans to open a business in four years when he retires. How much must he invest today to have $10,000 when he retires if the bank pays 2% annually, compounded quarterly?

12. Charlie has a child who will be college age in five years. How much must he set aside today to have $20,000 for college tuition in five years if he gets 1.5% annually, compounded annually?

Answer rating: 100% (QA)

To solve these problems we need to use the formula for future value of a single amount which is FV P... View the full answer