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EXERCISES

The document contains a series of simple interest and discount problems for practice, including calculations for borrowed amounts, interest rates, and repayment amounts. It also includes compound interest problems that require determining future values based on various interest rates and compounding periods. The exercises are designed to enhance understanding of financial concepts related to loans and investments.

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ezekiel nyamu
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13 views4 pages

EXERCISES

The document contains a series of simple interest and discount problems for practice, including calculations for borrowed amounts, interest rates, and repayment amounts. It also includes compound interest problems that require determining future values based on various interest rates and compounding periods. The exercises are designed to enhance understanding of financial concepts related to loans and investments.

Uploaded by

ezekiel nyamu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SECTION 6.

1 PROBLEM SET: SIMPLE INTEREST AND DISCOUNT


Do the following simple interest problems.

1) If an amount of $2,000 is borrowed at a simple interest rate of 10% for 3


years, how much is the interest?
2) You borrow $4,500 for six months at a simple interest rate of 8%. How
much is the interest?
3) John borrows $2400 for 3 years at 9% simple interest. How much will he
owe at the end of 3 years?
4) Jessica takes a loan of $800 for 4 months at 12% simple interest. How
much does she owe at the end of the 4-month period?
5) If an amount of $2,160, which includes a 10% simple interest for 2 years,
is paid back, how much was borrowed 2 years earlier?
6) Jamie just paid off a loan of $2,544, the principal and simple interest. If he
took out the loan six months ago at 12% simple interest, what was the
amount borrowed?
7) Shanti charged $800 on her charge card and did not make a payment for
six months. If there is a monthly charge of 1.5%, how much does she owe?
8) A credit card company charges 18% interest on the unpaid balance. If you
owed $2000 three months ago and have been delinquent since, how much
do you owe?.
9) An amount of $2000 is borrowed for 3 years. At the end of the three
years, $2660 is paid back. What was the simple interest rate?
10) Nancy borrowed $1,800 and paid back $1,920, four months later. What
was the simple interest rate?
11) Jose agrees to pay $2,000 in one year at an interest rate of 12%. The
bank subtracts the discount of 12% of $2,000, and gives the rest to Jose.
Find the amount of the discount and the proceeds to Jose.
12) Tasha signs a note for a discounted loan agreeing to pay $1200 in 8
months at an 18% discount rate. Determine the amount of the discount and
the proceeds to her.
13) An amount of $8,000 is borrowed at a discount rate of 12%, find the
proceeds if the length of the loan is 7 months.
14) An amount of $4,000 is borrowed at a discount rate of 10%, find the
proceeds if the length of the loan is 180 days.
15) Derek needs $2400 new equipment for his shop. He can borrow this
money at a discount rate of 14% for a year. Find the amount of the loan he
should ask for so that his proceeds are $2400.
16) Mary owes Jim $750, and wants to repay him. Mary decides to borrow the
amount from her bank at a discount rate of 16%. If she borrows the money
for 10 months, find the amount of the loan she should ask for so that her
proceeds are $750?

SECTION 6.2 PROBLEM SET: COMPOUND INTEREST


Do the following compound interest problems involving a lump-sum amount.

1) What will the final amount be in 4 years if $8,000 is invested at 9.2%


compounded monthly.?
2) How much should be invested at 10.3% for it to amount to $10,000 in 6
years?

3) Lydia's aunt Rose left her $5,000. Lydia spent $1,000 on her wardrobe and
deposited the rest in an account that pays 6.9% compounded daily. How
much money will she have in 5 years?

4) Thuy needs $1,850 in eight months for her college tuition. How much
money should she deposit lump sum in an account paying 8.2% compounded
monthly to achieve that goal?
5) Bank A pays 5% compounded daily, while Bank B pays 5.12%
compounded monthly. Which bank pays more? Explain.
6) EZ Photo Company needs five copying machines in 2 1/2 years for a total
cost of $15,000. How much money should be deposited now to pay for these
machines, if the interest rate is 8% compounded semiannually?
7) Jon's grandfather was planning to give him $12,000 in 10 years. Jon has
convinced his grandfather to pay him $6,000 now, instead.
If Jon invests this $6,000 at 7.5% compounded continuously, how much
money will he have in 10 years?

8) What will be the price of a $20,000 car in 5 years if the inflation rate is
6%?
9) At an interest rate of 8% compounded continuously, how many years will
it take to double your money? 10) If an investment earns 10%
compounded continuously, in how many years will it triple? .
11) The City Library ordered a new computer system costing $158,000; it will
be delivered in 6 months, and the full amount will be due 30 days after
delivery. How much must be deposited today into an account paying 7.5%
compounded monthly to have $158,000 in 7 months?
12) Mr. and Mrs. Tran are expecting a baby girl in a few days. They want to
put away money for her college education now. How much money should
they deposit in an account paying 10.2% so they will have $100,000 in 18
years to pay for their daughter's educational expenses?
13) Find the effective interest rate for an account paying 7.2% compounded
quarterly.14) If a bank pays 5.75% compounded monthly, what is the
effective interest rate?
15) The population of the African nation of Cameroon was 12 million people
in the year 2015; it has been growing at the rate of 2.5% per year. If the
population continues to grow that rate,what will the population be in 2030?
16) According to the Law of 70, if an amount grows at an annual rate of 1%,
then it doubles every seventy years. Suppose a bank pays 5% interest, how
long will it take for you to double your money? How about at 15%?
6.1.1: Simple Interest and Discount (Exercises) - Mathematics LibreTexts

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