Question

If someone can help with ALL the questions that would be greatly appreciated. The last answer I got for this post only answered the first question. Which is $60, but I really need help with all of them. This subject has been difficult for me to grasp. Thank you all for your help.

1. Avril deposited $800 in his bank at 1.5% for five years.
a) Use the simple interest formula to calculate the
amount of interest Avril will earn.
b) Calculate the future value of her deposit.

2. Phyllis borrowed $1,000 at 2% APR for six months. Use the simple interest formula to calculate the total amount of interest Phyllis will pay if she pays $200 two months into the loan and the rest at six months.

3. James deposited $500 in his bank at 4.5% for 90 days.
a) Use the simple interest formula to calculate the
amount of interest James will earn using exact
interest.
b) Calculate the future value of the deposit.

4. On May 4 Ariel signed a simple discount note for $3,500 at 3 1/2% for 60 days.
a) Use the simple interest formula to calculate
the amount of interest Ariel will pay using
ordinary interest.
b) Calculate the proceeds she will receive on
May 4.
c) Calculate the amount she will pay at maturity
d) Determine the date it will be due.

5. What is the APY (effective rate) for 16% APR compounded quarterly? Round to hundredths.

6. Louisa invested $4,500 at 4% interest compounded semiannually for two years. Calculate the future value of Louisa's investment using Exhibit 11-1 or the formula FV = P(1 + R)n.

7. Cleve wants to know how much he would need to deposit now in order to have $8,000 in five years at a rate of 6% compounding quarterly. Use Exhibit 11-2 or the formula P = FV/(1 + R)n.

8. I want to borrow $900 for 20 days from a payday loan store. The payday loan finance charge is $12 per $100 borrowed up to $400, and $10 per 100 on the amount over $400. What is the dollar amount of interest I am paying? What is the APR of this loan?

9. Using Exhibit 12-1 or the formula, calculate the future value of an ordinary annuity with a quarterly payment of $1,000 made at the end of each quarter for four years compounding quarterly at 8%.

10. Using Exhibit 12-1 or the formula, calculate the future value of an annuity due with a monthly payment of $50 made at the beginning of each month for 2.5 years compounding monthly at 6%.

Answer 1

a) Simple interest = PRT/100 = (800 x 1.5 x 5)/100 = $60

b) Future value = P(1 + RT) = 800(1 + 0.015 x 5) = $870

Total time of loan = 6 months

Phyllis pays $200 two months into the loan, so she still owes $800 for the remaining 4 months.

Simple interest = PRT/100 = (800 x 2 x 4)/100 = $64

Total interest = $64 + $20 = $84

a) Exact interest = PRT/365 = (500 x 4.5 x 90)/36500 = $5.48

b) Future value = P(1 + RT) = 500(1 + 0.045 x 90/365) = $508.22

a) Ordinary interest = PTR/100 = (3500 x 3.5 x 60)/360 = $183.75

b) Proceeds = P - I = 3500 - 183.75 = $3316.25

c) Amount to be paid at maturity = P = $3500

d) Due date = May 4 + 60 days = July 3

APY = (1 + R/n)^n - 1 = (1 + 0.16/4)^4 - 1 = 0.1664 or 16.64%

Future value = P(1 + R/n)^(nt) = 4500(1 + 0.04/2)^(2 x 2) = $5,011.03

P = FV/(1 + R/n)^(nt) = 8000/(1 + 0.06/4)^(4 x 5) = $5,764.44

Interest = (900 x 0.12) + (500 x 0.1) = $132

APR = (132/900) x (365/20) x 100% = 730%

Future value = PMT x ((1 + R/n)^(nt) - 1)/(R/n) = 1000 x ((1 + 0.08/4)^(4 x 4) - 1)/(0.08/4) = $47,490.08

Future value = PMT x ((1 + R/n)^(nt) - 1)/(R/n) x (1 + R/n) = 50 x ((1 + 0.06/12)^(12 x 2.5) - 1)/(0.06/12) x (1 + 0.06/12) = $1,327.10