01:640:106 Lecture Notes - Lecture 9: Growth Factor

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orchidbutterfly154

20 Oct 2016

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Monday, october 10, 2016: jerry has a line of credit in which he can borrow as much money as he wants at an effective rate of 7. 43%. I = 10600. 38 - 10503. 00 = . 38: a bank account pays 5. 29% annual interest compounded daily. 1526. 79: calculate the effective rate of the account. i = . 0529/365. 1 year growth factor (1+. 0529/365)^365 = 1. 054320166 - 1 = . 05432: now use the effective rate to calculate the balance of the account after 8 years. You should get the same answer as in #1. !1: use the rule of 72 to calculate approximately how long it takes ,250 to grow to ,000 at 7. 34% compound interest. 9. 8 x 4 = 39. 2 years: use the rule of 72 to calculate the approximate interest rate that would be needed for ,000 to grow to ,000 in 19 years.

Related Questions

Problem 1

Part A: (Simple Interest) Rami has $1,500 in his bank account. He earns simple interest of 8% per year.

a- Deduce the value of the account (ðð¡ =?) after 3 years.

b- Suppose Rami wishes to buy a car for $4,500. Will he be able to buy it after 3 years? (No calculation needed)

Part B: (Interest compounded semi-annually) Calculate the present value (ð0 =? ) of $20,000 to be received in 5 yearsâ time when the discount rate is 5% per year, compounded semi-annually.

Problem 2 Part A: (Simple interest)

A savings account of $8,000 earns simple interest of 6% per annum.

a- Calculate the amount (I =?) received after 5 years. b- Deduce the value of the account (ðð¡ =?) after 5 years.

Part B: (Interest compounded semi-annually) Mohammad is saving $5,000 in a bank X for 3 years at 8% per annum compounded semiannually. Calculate the total value of the amount

Problem 3 (Interest compounded quarterly) As a graduation gift, your parents opened a bank account with $5,000 under your name. This account pays 5% interest rate per annum; compounded quarterly. If you decided to save the money over two years, by how much will your balance increase after two years?

turquoiseworm480

1. A man took out a $45,000 construction loan to remodel a house. The loan rate is

8.3 % simple interest per year to be repaid in nine months. How much is paid back?

The man pays back

$________

2. Find the maturity value of a loan of $2,600 after two years. The loan carries a simple interest rate of 7.7 % per year. (Round to the nearest cent as needed.)

The maturity value of the loan is

$._____

3. A man needed money to buy lawn equipment. He borrowed $800.00 for eight months and paid $53.95 in interest. What was the rate of interest?

The rate of interest per year was

_______ %.

(Round to one decimal place as needed.)

4. A man has a simple discount note for $6,300at an ordinary bank discount rate of

8.61%, for 50 days.

Round to the nearest tenth of a percent.

The effective interest rate is

_________ %.

(Round to the nearest tenth of a percent as needed.)

01:640:106 Lecture Notes - Lecture 9: Growth Factor

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