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Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 1 Homework, Page 341 Find the amount A accumulated after investing.

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Presentation on theme: "Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 1 Homework, Page 341 Find the amount A accumulated after investing."— Presentation transcript:

1 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 1 Homework, Page 341 Find the amount A accumulated after investing a principal P for t years at an interest rate of r compounded annually. 1.

2 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 2 Homework, Page 341 Find the amount A accumulated after investing a principal P for t years at an interest rate of r compounded n times per year. 5.

3 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 3 Homework, Page 341 Find the amount A accumulated after investing a principal P for t years at an interest rate of r compounded continuously. 9.

4 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 4 Homework, Page 341 Find the future value FV accumulated in an annuity after investing periodic payments R for t years at an annual interest rate r with payments made and interest credited k times per year. 13.

5 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 5 Homework, Page 341 Find the present value PV of a loan with annual interest rate r and periodic payments R for a term of t years, with payments made and interest charged 12 times per year. 17.

6 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 6 Homework, Page 341 Find the periodic payment R of a loan with present value PV and an annual interest rate r for a term of t years, with payments made and interest charge 12 times per year. 19.

7 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 7 Homework, Page 341 21. If John invests $2,300 in a savings account with a 9% interest rate compounded quarterly, how long will it take until John’s account has a balance of $4,150? 6.631 years or 6 yrs., 8 mos.

8 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 8 Homework, Page 341 25. What interest rate, compounded daily, is required for a $22,000 investment to grow to $36,500 in 5 years? 10.127%

9 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 9 Homework, Page 341 29. Determine how much time is required for an investment to double in value if interest is earned at the rate of 5.75%, compounded quarterly.

10 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 10 Homework, Page 341 33. Complete the table about continuous compounding. PrincipalAPR2X TimeA(15) $9,500?4 years?

11 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 11 Homework, Page 341 37. Complete the table about annual compounding. APRn2X Time 7%1?

12 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 12 Homework, Page 341 Find the annual percentage yield (APY) for the investment. 41. $3,000 at 6% compounded quarterly

13 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 13 Homework, Page 341 45. Which investment is more attractive, 5% compounded monthly or 5.1% compounded quarterly? Investing at 5.1% compounded quarterly is more attractive.

14 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 14 Homework, Page 341 49. Jolinda contributes to the Celebrity Retirement Fund which earns 12.4% annual interest. What should her monthly payments be if she wants to accumulate $250,000 in 20 years? Jolinda should invest $239.41 per month to reach her goal.

15 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 15 Homework, Page 341 53. Gendo obtains a 30-year $86,000 house loan with an APR of 8.75% from National City Bank. What is her monthly payment Gendo’s mortgage payment is $676.56 per month.

16 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 16 Homework, Page 341 57. Explain why computing the APY for an investment does not depend on the actual amount being invested. The APY does not depend on the amount invested, because both sides of the equation used in computing APY contain P as a factor, so the equation may be divided by P, eliminating it as a factor.

17 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 17 Homework, Page 341 57. Give a formula for the APY on a $1 investment at annual rate r, compounded n times per year. How do you extend the result to a $1,000 investment? The APY formula given above applies to an investment of $1,000 without modification.

18 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 18 Homework, Page 341 61. If $100 is invested at 5% annual interest for one year, there is no limit to the final value of the investment if it is compounded sufficiently often. Justify your answer. False. The most frequently the interest could be compounded is continuously and the final value of the investment after one year of continuous compounding is a finite number.

19 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 19 Homework, Page 341 65.Mary Jo deposits $300 each month into her retirement account that pays 4.5% APR. Find the value of her annuity after 20 years. A. $71, 625.00 B. $72,000.00 C. $72, 375.20 D. $73,453.62 E. $116,437.31

20 Copyright © 2007 Pearson Education, Inc. Publishing as Pearson Addison-Wesley Slide 3- 20 Homework, Page 341 69. The function describes the future value of a certain annuity. a. What is the annual interest rate. 8% per year b. How many payments per year are there? 12 payments per year c. What is the amount of each payment? $100


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