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97.
What is the effective annual rate of 5.25 percent compounded
continuously?
98.
City Bank wants to appear competitive based on quoted loan rates and thus
must offer a 7.75 percent annual percentage rate on its loans. What is the
maximum rate the bank can actually earn based on the quoted rate?
99.
You are going to loan a friend $550 for one year at a 6 percent rate of
interest, compounded annually. How much additional interest could you
have earned if you had compounded the rate continuously rather than
annually?
100.
You are borrowing money today at 8.48 percent, compounded annually. You
will repay the principal plus all the interest in one lump sum of $12,800 two
years from today. How much are you borrowing?
101.
This morning, you borrowed $9,500 at 8.9 percent annual interest. You are
to repay the loan principal plus all of the loan interest in one lump sum four
years from today. How much will you have to repay?
102.
On this date last year, you borrowed $3,400. You have to repay the loan
principal plus all of the interest six years from today. The payment that is
required at that time is $6,000. What is the interest rate on this loan?
103.
John's Auto Repair just took out a $52,000, 10-year, 8 percent, interest-only
loan from the bank. Payments are made annually. What is the amount of the
loan payment in year 10?
104.
On the day you entered college, you borrowed $18,000 on an interest-only,
four-year loan at 5.25 percent from your local bank. Payments are to be paid
annually. What is the amount of your loan payment in year 2?
105.
On the day you entered college you borrowed $30,000 from your local bank.
The terms of the loan include an interest rate of 4.75 percent. The terms
stipulate that the principal is due in full one year after you graduate.
Interest is to be paid annually at the end of each year. Assume that you
complete college in four years. How much total interest will you pay on this
loan?
106.
You just acquired a mortgage in the amount of $249,500 at 6.75 percent
interest, compounded monthly. Equal payments are to be made at the end
of each month for thirty years. How much of the first loan payment is
interest? (Assume each month is equal to 1/12 of a year.)
107.
On June 1, you borrowed $220,000 to buy a house. The mortgage rate is
8.25 percent. The loan is to be repaid in equal monthly payments over 15
years. The first payment is due on July 1. How much of the second payment
applies to the principal balance? (Assume that each month is equal to 1/12
of a year.)
108.
This morning, you borrowed $150,000 to buy a house. The mortgage rate is
7.35 percent. The loan is to be repaid in equal monthly payments over 20
years. The first payment is due one month from today. How much of the
second payment applies to the principal balance? (Assume that each month
is equal to 1/12 of a year.)
109.
Western Bank offers you a $21,000, 9-year term loan at 8 percent annual
interest. What is the amount of your annual loan payment?
110.
First Century Bank wants to earn an effective annual return on its consumer
loans of 10 percent per year. The bank uses daily compounding on its loans.
By law, what interest rate is the bank required to report to potential
borrowers?
111.
Downtown Bank is offering 2.2 percent compounded daily on its savings
accounts. You deposit $8,000 today. How much will you have in your
account 11 years from now?
112.
You want to buy a new sports coupe for $41,750, and the finance office at
the dealership has quoted you an 8.6 percent APR loan compounded
monthly for 48 months to buy the car. What is the effective interest rate on
this loan?
113.
Beginning three months from now, you want to be able to withdraw $1,700
each quarter from your bank account to cover college expenses over the
next 4 years. The account pays 1.25 percent interest per quarter. How much
do you need to have in your account today to meet your expense needs over
the next 4 years?
114.
You are planning to save for retirement over the next 15 years. To do this,
you will invest $1,100 a month in a stock account and $500 a month in a
bond account. The return on the stock account is expected to be 7 percent,
and the bond account will pay 4 percent. When you retire, you will combine
your money into an account with a 5 percent return. How much can you
withdraw each month during retirement assuming a 20-year withdrawal
period?
